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Will Gilead (GILD) Miss Earnings on High Operating Costs? - Analyst Blog

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Gilead Sciences, Inc. ( GILD ) is set to report third-quarter 2014 results on Oct 28 after the market closes. Last quarter, the company delivered a positive earnings surprise of 44.10%. Let's see how things are shaping up for this announcement.

Factors Influencing this Quarter

Gilead's blockbuster hepatitis C virus treatment, Sovaldi, is expected to contribute meaningfully to the company's top line in the third quarter, as it has been the case since its launch in Dec 2013 in the U.S. The drug recorded sales of $3.5 billion in the second quarter of 2014. Moreover, the anti-viral franchise at Gilead is expected to continue to perform well this quarter driven by treatments like Complera and Stribild. The strong performance of all these products will drive the top line higher.

Gilead's portfolio was further boosted by the addition of oncology product, Zydelig. In Jul 2014, the FDA cleared Zydelig in combination with Roche's ( RHHBY ) Rituxan for treating patients with relapsed chronic lymphocytic leukemia. Focus will also be on the performance of Gilead's first oncology product.

However, the bottom line is expected to be affected by higher operating costs as Gilead continues to develop its pipeline. Costs associated with the marketing of Sovaldi and the launch of Zydelig will also cause operating expenses to escalate.

Earnings Whispers?

Our proven model however does not conclusively show that Gilead is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP for Gilead is 0.00% since the Most Accurate Estimate as well as the Zacks Consensus Estimate stands at $1.64.

Zacks Rank #3 (Hold): Gilead's Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements -- a positive Zacks Earnings ESP and a Zacks Rank #1, 2 or 3 -- to post an earnings beat this quarter.

Teva Pharmaceutical Industries Limited ( TEVA ) has an earnings ESP of +5.79% and carries a Zacks Rank #2 (Buy). It is scheduled to report its third-quarter results on Oct 30.

Vertex Pharmaceuticals Incorporated ( VRTX ) has an earnings ESP of +28.07% and carries a Zacks Rank #3. It is scheduled to report its third-quarter results on Oct 28.

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GILEAD SCIENCES (GILD): Free Stock Analysis Report

ROCHE HLDG LTD (RHHBY): Free Stock Analysis Report

VERTEX PHARM (VRTX): Free Stock Analysis Report

TEVA PHARM ADR (TEVA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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