Gilead reported strong second quarter results, with both revenues
as well as earnings beating expectations by huge margins The
company's second-quarter adjusted earnings of $2.32 per share blew
past the Zacks Consensus Estimate of $1.61. The massive earnings
outperformance was attributable to the exceptional performance of
Sovaldi in its second full quarter in the market. Sovaldi's strong
sales ($3.48 billion) helped Gilead record total revenues of $6.53
billion, easily surpassing the Zacks Consensus Estimate. We are
also positive on the FDA approval of Zydelig. We believe that the
current price represents an attractive entry point for long-term
investors with plenty of scope for appreciation. Consequently, we
upgrade the stock to Outperform.
Gilead Sciences, Inc., a biopharmaceutical company, focuses on
the discovery, development and commercialization of drugs for
treating HIV/AIDS, liver diseases such as hepatitis B virus (HBV)
and hepatitis C virus (HCV), respiratory, oncology /inflammation
and cardiovascular related diseases. Lead products at Gilead
include HCV therapy, Sovaldi, apart from Truvada, Viread, Atripla,
Complera, Stribild and Emtriva for the treatment of HIV in adults.
Besides the HIV franchise, Gilead's other products include AmBisome
(treatment of fungal infection) and Letairis (treatment of
pulmonary arterial hypertension). Gilead's portfolio also includes
Cayston (improvement of respiratory symptoms in patients suffering
from cystic fibrosis with pseudomonas aeruginosa) and Ranexa
(chronic angina). The FDA approval of Zydelig (idelalisib 150 mg)
for treating three cancer forms has further boosted Gilead's
The U.S. approval of HCV therapy, Sovaldi, in Dec 2013 is a big
positive for Gilead as the drug offers significant commercial
potential. The European approval of the drug came in Jan 2014.
Sovaldi is also available in Canada. The drug is off to a strong
start recording sales of approximately $5.8 billion in the first
six months of 2014.
Gilead operates in North America, South America, Europe and
Asia-Pacific. Total revenues at Gilead came in at $11.20 billion in
2013, up 15%. Strong sales of the company's antiviral products
contributed to the increase. In 2013, total antiviral products
accounted for 86.5% of product sales. Total product sales climbed
15% to $10.80 billion in 2013. The company, founded in 1987, is
headquartered in Foster City, CA.
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