Gilead Sciences shares gain after topping expectations despite lower remdesivir sales

Gilead Sciences (NASDAQ: GILD) shares rallied in early Friday trading in reaction to the company's latest earnings report, which saw it beat top and bottom-line consensus expectations.

The biopharmaceutical company posted fourth-quarter earnings of $1.67 per share, $0.17 above the analyst consensus estimate of $1.50, while revenue for the quarter came in at $7.4 billion, beating expectations of $6.66 billion.

The company's revenue increased year-over-year, primarily due to increased sales in Oncology, HIV, and hepatitis C virus. However, this was partially offset by lower Veklury (remdesivir) sales, which decreased 26% to $1 billion in the quarter, driven mainly by lower rates of Covid-19-related hospitalizations.

Even so, Gilead said 2022 marked the strongest full-year growth in its base business since hepatitis C virus sales peaked in 2015. The company stated that the return to growth was driven by "consistent and high-quality commercial and clinical execution across our portfolio."

At the time of writing, Golead shares are up more than 5%.

Looking forward, Gilead Sciences sees FY2023 earnings of $6.60 to $7 per share, versus the consensus of $6.73, while revenue is seen between $26 billion and $26.5 billion, versus the consensus of $27 billion.

Reacting to the report, Wells Fargo analyst Mohit Bansal, who has an Equal Weight rating and $90 price target on the stock, said Gilead's good guidance sets up its base business well, but it is lacking major catalysts.

"GILD posted a robust 2023 guide that continues to suggest better business fundamentals, but at these levels we think the stock requires some major pipeline catalyst for multiple expansion at this point," wrote Bansal.

Jefferies analyst Michael Yee felt differently, however, maintaining a Buy rating and $100 per share price target on the stock, stating there are a few catalysts this year.

"Gilead remains a solid value play at ~12x PE, ~3.5% yield, beating quarters w/good guidance, and defensive in this environment," wrote Yee. "Expectations remain low, and upside from Trop2 lung cancer, TIGIT lung cancer, and class action lawsuit developments, are all pot'l (+) events this year. Guidance looks conservative (higher Veklury guidance vs cons leaves cushion for BD deals or dropping to higher EPS)."

By Sam Boughedda

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