Gilead Sciences, Inc. (GILD) Under Pressure After Disappointing Q1 Earnings Report; Maxim Weighs In


Days are becoming tough for Gilead Sciences, Inc. (NASDAQ:GILD) as it recently released its 1Q17 earnings report. The drug maker unveiled poor results, missing both top-line and bottom-line consensus numbers, and faces increasing pressure amid growing competition. In reaction, Maxim analyst Gabrielle Zhou reiterated Hold rating without listing a price target.

For the first quarter of 2017, Gilead reported total revenues of $6.5B, falling just under consensus estimates of $7.2B along with product sales of $6.4B in 4Q16, marking an 11% and a 12% downside respectively. Moreover, Hepatitis C Virus (HCV) product revenues dropped from $3.2B in 3Q to $2.6B previous quarter, which represents an approximate 20% dip, due to a downside in revenues for Harvoni ($1.4B), Sovaldi ($313M) and Epclusa ($892M). However, Human Immunodeficiency Virus (HIV) and Hepatitis B Virus (HBV) sales reached $3.3B, thanks to an increase in TAF-based products revenues for Genvoya (which represented a 37% increase), Odefsey and Descovy.

Zhou points out that Gilead is facing tough competition, as the Chinese FDA just approved Bristol-Myers Squibb’s drug Daklinza in combination with Sunvepra for genotype 1b chronic hepatitis C infection, making Gilead’s rival “the winner in entering the vast Chinese market as the first of its kind to be approved for sale in the country.” This could potentially justify the decreasing revenues.

“Gilead is feeling the pressure in the highly competitive HCV market. Although the uptake from TAF-based regimens continued to drive the HIV and HBV franchises, GILD missed both top-line and bottom-line consensus numbers for the quarter. Can NASH be the next catalyst for Gilead? We are hopeful with the recent positive data of GS-0976 presented at EASL, but it’s too early to make the call now. We await more clinical progress from Gilead internally and clarity on the company’s strategy on acquiring growth. As a result, we remain Hold rated in the stock,” concludes the analyst.

As usual, we recommend taking analysts’ recommendations with a grain of salt. According to TipRanks, a financial engine that measures and ranks analysts’ and bloggers’ performance, Gabrielle Zhou is ranked #4060 out of #4561 analysts. Zhou has a 34% success rate and generates an annual yield of -5.9%. When recommending GILD, the analyst earns a 0.0% average profit on the stock.

TipRanks analytics show GILD as a Moderate Buy. Based on 19 analysts offering recommendations for this share, 12 issue a Buy and 7 maintain a Hold. The 12-month average price target stands at $80.14, making a nearly 19% upside from where the stock is currently trading.