It has been about a month since the last earnings report for Gilead Sciences, Inc. (GILD Quick QuoteGILD - Free Report) . Shares have added about 4.3% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Gilead Beats Q4 Earnings & Sales, View Disappoints

Gilead Sciences’ fourth-quarter 2016 earnings (including the impact of stock-based compensation expenses) of $2.64 per share beat the Zacks Consensus Estimate of $2.31. However, earnings were down from $3.27 in the year-ago quarter.

Moreover, total revenue in the reported quarter came in at $7.3 billion, down 13.9% year over year. Nevertheless, quarterly revenues marginally beat the Zacks Consensus Estimate of $7.2 billion.

HCV Franchise Disappoints Again, HIV Impresses

Product sales came in at $7.2 billion, down 14.2% year over year. The decline was due to lower hepatitis C virus (HCV) sales, partially offset by higher sales across HIV and other therapeutic areas.

Antiviral product sales, which include Gilead's HIV and liver disease portfolios, came in at $6.6 billion in the fourth-quarter 2016, down 16.4%.
HCV product sales, which include Harvoni, Sovaldi and the recently launched Epclusa, were $3.2 billion, down 34.7%. The downside was mainly attributed to lower sales of Harvoni and Sovaldi, partially offset by sales of Epclusa (launched in 2016) across various locations.

Sales of Harvoni declined 51% year over year to $1.6 billion in the reported quarter. The decline was mainly due to lower sales in the U.S. (down 42.8% to 976 million) and Europe (down 38.2% to $363 million). Further, Sovaldi sales recorded a year-over-year decline of 65% to $541 million.

Epclusa garnered sales of $1.0 billion in the reported quarter, significantly higher than $640 million reported in the prior quarter. We note that Epclusa was launched in the U.S. and Europe in June and July, respectively.

Meanwhile, HIV and other antiviral product sales came in at $3.4 billion, up 13.3% year over year. The increase was primarily driven by continuous strong uptake of tenofovir alafenamide (TAF)-based products such as Genvoya, which generated sales of $563 million, up from $461 million in the prior quarter; Descovy, which recorded sales of $149 million, up from $88 million in the third quarter of 2016; and Odefsey, which registered sales of $155 million, up from $105 million in the year-ago period.

HIV treatments like Stribild and Complera/Eviplera declined while Viread was up 6% to $297 million). However, Atripla sales tanked 24% to $607 million, while Truvada sales fell 7% to $868 million.

Other products like Letairis, Ranexa, AmBisome and Zydelig recorded sales of $226 million (up 18%), $210 million (up 24%), $94 million (up 27%) and $39 million (down 3%), respectively.

Research & development (R&D) expenses were up 59.5% to $1.2 billion. The increase was primarily due to overall development of the company’s clinical studies.  Selling, general and administrative (SG&A) expenses were down 6.9% to $992 million.

Adjusted product gross margin was 88.1%, down from 89.8% in the year-ago period.

2016 Results

Revenues came in $30.4 billion, down from $32.6 billion in 2015.  Earnings per share came in at $11.37, down from $12.44 in 2015 but beat the Zacks Consensus Estimate of $11.00.

2017 Guidance

Gilead expects net product sales in the range of $22.5–$24.5 billion. Non-HCV product sales are projected between $15 billion and $15.5 billion.  HCV product sales are projected between $7.5 billion and $9.0 billion.

Adjusted R&D expenses and adjusted SG&A expenses are projected in the range of $3.1–$3.4 billion and $3.1–$3.4 billion, respectively.

Adjusted product gross margin is estimated in the range of 86–88%.

Dividend and Share Repurchase

Concurrently, Gilead declared an increase of 10% in the quarterly cash dividend from $0.47 per share to $0.52 per share, beginning in the first-quarter 2017. The dividend is payable on Mar 30 to stockholders of record at the close of business on Mar 16. In 2016, the company repurchased 123 million shares worth $11 billion. Gilead currently has $9 billion under its 2016 share repurchase authorization.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.

Gilead Sciences, Inc. Price and Consensus

 

Gilead Sciences, Inc. Price and Consensus | Gilead Sciences, Inc. Quote

VGM Scores

At this time, Gilead Sciences' stock has an average Growth Score of 'C', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of 'B'. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is suitable for value investors.

Outlook

The stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.