Gilead Sciences, Inc.'s
(
GILD
) first quarter 2012 earnings (excluding special items but
including stock option expense) of 61 cents per share fell well
short of the Zacks Consensus Estimate of 92 cents. Also,
first-quarter adjusted earnings decreased 25.6% from the year-ago
period. Higher-than-expected expenses led to the earnings miss in
the reported quarter.
Revenues climbed 19% to $2.28 billion, beating the Zacks
Consensus Estimate of $2.21 billion. Foreign exchange (Fx)
fluctuations adversely impacted revenues by $16.4 million.
Quarter in Details
Product sales climbed 19% to $2.21 billion, driven by antiviral
products such as Atripla (up 19% to $887.6 million), Truvada (up
13% to $758.3 million), Viread (up 14% to $191.7 million) and
Letairis (up 40% to $87.3 million). Products sales were also aided
by the launch of Complera/Eviplera last year.
Antiviral product sales for the quarter grew 18% to $1.93
billion. While the US market contributed $1.08 billion (up 24.0%)
to antiviral product sales, Europe contributed $696.5 million (up
7%). Other products such as Cayston and AmBisome liposome recorded
sales of $112.0 million (up 9.4%).
Gilead's royalty, contract and other revenues climbed 19% to
$74.1 million driven primarily by increased royalties from
GlaxoSmithKline
(
GSK
) regarding pulmonary arterial hypertension drug, Volibris.
On the operational front (excluding special items but including
stock option expense), operating margin came down to 36.8% from
47.8% a year ago due to higher costs. Both research &
development (R&D) expenses (up 77% to $450 million) and
selling, general and administrative (SG&A) expenses (up 46.5%
to $429.7 million) were on the upswing during the quarter. While
R&D expenses jumped primarily due to Gilead's efforts to
develop its pipeline, SG&A expenses increased primarily due to
Gilead's efforts to expand further coupled with higher
pharmaceutical excise tax.
Neutral on Gilead
We have a Neutral recommendation on Gilead. Our long-term stance
is in line with the Zacks #3 Rank (Hold rating) carried by the
company in the short run. We remain optimistic on the growth
prospects of the company's HIV drugs, Truvada and Atripla. We are
also encouraged by the approval of Complera/Eviplera, which
together with Quad, once approved, will further fortify the HIV
franchise and help mitigate the impact of the upcoming patent
expirations.
Gilead is looking to combat the threat of genericization by
inking deals and acquisitions and introducing new products. To
further strengthen its hepatitis C virus (HCV) portfolio, Gilead
purchased Pharmasset in January 2012, for approximately $11.1
billion.
GILEAD SCIENCES (
GILD
): Free Stock Analysis Report
GLAXOSMITHKLINE (
GSK
): Free Stock Analysis Report
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