Gilead Sciences, Inc.
) third quarter 2012 earnings (excluding special items but
including stock option expense) of 95 cents per share beat the
Zacks Consensus Estimate of 90 cents. The company's third quarter
2012 adjusted earnings decreased approximately 2.1% from the
year-ago period due to higher expenses.
Revenues climbed 14% to $2.43 billion, beating the Zacks
Consensus Estimate of $2.33 billion. The increase in total
revenue was attributable to higher product sales. Foreign
exchange (Fx) fluctuations adversely impacted product sales by
Quarter in Details
Product sales climbed 14% to $2.36 billion, driven by antiviral
products, such as Atripla (up 9% to $865.4 million), Truvada (up
8% to $804.2 million), Viread (up 11% to $214.9 million) and
Letairis (up 33% to $105.1 million). Products sales were also
aided by the launch of Complera/Eviplera last year. Stribild, a
HIV combination pill, launched in the US in August 2012,
contributed $17.5 million to total revenues in the third quarter
Antiviral product sales for the quarter grew 13% to $2.04
billion. The US market contributed $1.17 billion (up 19%) to
antiviral product sales, while Europe contributed $710 million
(up 5%). Other products including Cayston and AmBisome liposome
recorded sales of $122 million (up 10.6%).
Gilead's royalty, contract and other revenues climbed 23% to
$68.6 million. The increase was primarily attributable to higher
royalty revenue from
) on Volibris.
On the operational front (excluding special items but including
stock option expense), operating margin declined to 46.3% from
48.5% a year ago due to higher costs. Both research &
development (R&D) expenses (up 41.4% to $406.79 million) and
selling, general and administrative (SG&A) expenses (up 8.8%
to $316.57 million) were on the upswing during the quarter. The
rise in R&D expenses was primarily driven by Gilead's efforts
to develop its pipeline, whereas SG&A expenses increased
primarily due to Gilead's efforts to expand along with an
increase in the US pharmaceutical excise tax.
Interest expenses jumped 107.2% to $89.3 million during the
quarter. The massive increase was attributable to Gilead's
acquisition of Pharmasset earlier this year.
Encouraged by the strong third quarter 2012 results, Gilead
increased its 2012 guidance for product sales. Product
sales are now expected in the range of $9.1-$9.2 billion (old
guidance: $8.8-$9 billion).
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We currently have a Neutral recommendation on Gilead. The stock
carries a Zacks #2 Rank (Buy rating) in the short run.