Shares of Gilead Sciences, Inc. (GILD - Analyst Report) hit a 52-week high of $46.37 on Mar 12. The announcement of impressive fourth quarter 2012 earnings results and upbeat sales guidance last month, combined with positive pipeline-related news, have buoyed this biopharmaceutical stock.
Moreover, this Zacks Rank #2 (Buy) company has delivered positive earnings surprises in 3 of the last 4 quarters. The long-term expected earnings growth rate for this stock is 21.7%.
Strong 4Q and Upbeat Sales Guidance
On Feb 4, 2013 Gilead reported higher-than-expected revenues and earnings for the final quarter of 2012. Better-than-expected earnings came on the back of higher revenues. Revenues climbed 17.6% to $2.59 billion. The increase in total revenue was attributable to higher product sales, which climbed 18%.
Driven by its strong product portfolio, Gilead gave a positive outlook for 2013 product revenue. The company expects 2013 product revenue in the range of $10–$10.2 billion, reflecting an increase of 6%–9% over 2012 levels.
Encouraging Pipeline News
Gilead has announced positive news related to its pipeline over the last month. In Feb 2013, Gilead announced encouraging top-line results from 2 phase III studies (Fission and Neutrino) on its chronic hepatitis C virus (HCV) candidate sofosbuvir. Also in Feb 2013, Gilead presented encouraging top-line data from a phase III study (Fusion) on sofosbuvir, combined with ribavirin, in patients suffering from genotypes 2 or 3 of the chronic hepatitis C virus (HCV). Through this study, Gilead is aiming to develop an all-oral treatment regimen to combat HCV.
Gilead intends to seek regulatory approvals for the candidate in the US and EU in the second quarter of 2013. Successful development of sofosbuvir would not only boost Gilead’s top line, but also will strengthen its position in the lucrative HCV market. A huge population suffers from HCV infection across the world. However, the treated population is much lower. This leaves the field open for new treatments. Apart from Gilead, companies such as Johnson & Johnson (JNJ - Analyst Report) are also developing therapies to combat HCV.
Apart from sofosbuvir, Gilead has also received encouraging news regarding its HIV pipeline earlier this month. Moreover, the company’s chronic angina drug, Ranexa recently fared well in a phase IV study, which evaluated Ranexa in patients with chronic angina and/or type II diabetes. If Ranexa is approved for the indication then the sales potential of the drug would be boosted as the type II diabetes market offers significant commercial potential.
The successful development and commercialization of the diversified pipeline should further enhance Gilead’s top line.
Other Stocks to Consider
Apart from Gilead, other Zacks #2 Ranked biopharma stocks include Array Biopharma (ARRY - Snapshot Report) and Kythera Biopharmaceuticals, Inc. .