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Will Strong HIV Sales Drive Gilead's (GILD) Q4 Earnings?

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Biotech major Gilead Sciences Inc. (GILD - Free Report) is slated to report fourth-quarter 2019 results on Feb 4, after market close.

Gilead has a disappointing track record, with earnings beating estimates in two of the last four quarters, the average negative surprise being 0.66%. In the last reported quarter, the company’s missed expectations by 0.57%.

Gilead Sciences, Inc. Price, Consensus and EPS Surprise


Gilead Sciences, Inc. Price, Consensus and EPS Surprise

Gilead Sciences, Inc. price-consensus-eps-surprise-chart | Gilead Sciences, Inc. Quote

Gilead’s stock has lost 8.6% in the past year compared with the industry's decline of 7.2%.

Let’s see how things have shaped up for this announcement.

Why a Likely Positive Surprise

Our proven model predicts an earnings beat for Gilead this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP for Gilead is +1.55% as the Zacks Consensus Estimate is pegged at $1.68, while the Most Accurate Estimate is pegged at $1.71.

Zacks Rank: It currently carries a Zacks Rank #3.

Factors at Play

Gilead did not provide any quarterly guidance. Strong performance of the HIV franchise led to better-than-expected sales in the third quarter, a trend that most likely continued in the fourth quarter.

The HIV franchise’s performance and other antiviral product sales in the fourth quarter might have been driven by the momentum of tenofovir alafenamide-based products — Genvoya, Descovy and Odefsey. Biktarvy’s uptake has been phenomenal in 2019 and its sales are likely to have boosted the top line in the fourth quarter. Per Gilead, Biktarvy is now the number one prescribed regimen for both treatment-naïve and switch patients in the United States in the quarter. However, stiff competition from the likes of GlaxoSmithKline (GSK - Free Report) might have limited market share gains. The Zacks Consensus Estimate for sales of Genvoya and Biktarvy is projected at $947 million and $1.4 billion, respectively.

HCV sales are likely to have declined in the fourth quarter due to competitive pressure.

Yescarta (axicabtagene ciloleucel) generated $118 million in sales during the third quarter of 2019 and fourth-quarter sales might have experienced a sequential increase, driven by a higher number of therapies provided to patients and its continued expansion in Europe.  Apart from the regular top and bottom-line numbers, we expect investors to focus on the company’s pipeline updates.

Gilead submitted a Biologics License Application (BLA) to the FDA for the investigational CAR T cell therapy, KTE-X19, for the treatment of adult patients with relapsed or refractory mantle cell lymphoma (MCL). The Marketing Authorization Application (MAA) for the same has been fully validated. It is now under evaluation with the European Medicines Agency (EMA).

The company also submitted a new drug application (NDA) to the FDA for JAK inhibitor candidate, filgotinib, for the treatment of adults with moderate-to-severe rheumatoid arthritis (RA). A priority review voucher was submitted with the NDA, which should shorten the anticipated time for review.

The FDA approved a label expansion of HIV treatment, Descovy, as a prevention option. The agency approved the treatment for a pre-exposure prophylaxis (PrEP) indication. Descovy for PrEP is indicated to reduce the risk of sexually acquired HIV-1 infection in adults and adolescents weighing at least 35 kg, who are HIV-negative and at risk for sexually acquired HIV, excluding individuals at risk from receptive vaginal sex.

Other Stocks to Consider

Here are some stocks you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this quarter.

Merck (MRK - Free Report) has an Earnings ESP of +1.05% and a Zacks Rank #3. The company is scheduled to release results on Feb 5. You can see the complete list of today’s Zacks #1 Rank stocks here.

Regeneron (REGN - Free Report) has an Earnings ESP of +5.39% and a Zacks Rank #3. The company is scheduled to release results on Feb 6.

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