Gilead Sciences Inc.
) performed impressively in the second quarter of 2013. The
company reported higher-than-expected revenues driven by strong
product sales. Gilead's second quarter 2013 adjusted earnings
were above the year-ago figure by a penny. Revenues climbed 15%
to $2.77 billion and surpassed the Zacks Consensus Estimate of
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The robust sales of newly launched products like
Complera/Eviplera and Stribild are indeed encouraging. Stribild
has performed well ever since its launch in the U.S. in Aug 2012.
Sales of the drug climbed 8% sequentially to $99.4 million in the
second quarter of 2013. The EU approval of the drug in May 2013
has boosted the sales potential of the drug. Sales of
Complera/Eviplera, launched in 2011, climbed 27% sequentially to
$188.7 million in the second quarter of 2013.
We expect these products to continue performing well. Gilead
expects 2013 product revenue in the range of $10-$10.2 billion,
reflecting an increase of 6%-9% over 2012 levels. We expect
Gilead to easily achieve the increased guidance driven by its
strong product portfolio. Following the strong
second-quarter results, we raised our earnings estimate for 2013.
We are also impressed by Gilead's robust pipeline led by the
late-stage hepatitis C virus (HCV) candidate, sofosbuvir. The
candidate is under review both in the U.S. (target date: Dec 8,
2013) and the EU. Gilead is highly optimistic about the potential
of sofosbuvir. We expect sofosbuvir to be approved in the U.S. in
December and have consequently increased our 2014 earnings
Approval of the candidate would not only boost Gilead's top line,
but also strengthen its position in the lucrative HCV market. A
sizeable population suffers from HCV the world over. However, the
treated population is much lower. This leaves the field open for
new treatments. We note that companies such as
Johnson & Johnson
) are also developing therapies to combat HCV.
The improving prospects of Gilead have prompted us to hold an
Outperform recommendation on the stock. We expect the stock price
to appreciate significantly from current levels. We believe that
the current price represents an attractive entry point for
investors. Our investment thesis is supported by a Zacks Rank #1
Apart from Gilead,
) too appears to be attractive in the biopharma space with a
Zacks Rank #1.