Investors hammered GILD stock on Wednesday after Gilead Sciences beat third-quarter expectations on the back of its Covid treatment, Veklury.
Veklury sales tumbled 31% to $636 million. But analysts polled by FactSet projected just $323.5 million in sales. RBC Capital Markets analyst Brian Abrahams noted Gilead raised its full-year outlook, but that's largely due to the unexpected boost from Veklury.
As analysts noted, Covid hospitalizations — and therefore Veklury sales — are unpredictable.
"This was an uninspiring quarter, with a good portion of this quarter's upside being due to a lower tax rate and better-than-forecast Veklury sales," Edward Jones analyst John Boylan said in a note. "Veklury sales are difficult to predict and likely will fluctuate with Covid-19 infection rates."
On today's stock market, GILD stock plunged 3.4% to 77.90.
GILD Stock: Flat Revenue, Earnings Jump
Total revenue was flat at $7.05 billion, well above forecasts for $6.81 billion, according to FactSet. Adjusted earnings came in at $2.29 per share and easily beat expectations for $1.92. Earnings surged 20.5% year over year.
Third Bridge analyst Lee Brown said many products missed expectations.
"Despite Gilead's results topping consensus at both the top and bottom line, the performance was entirely unsatisfying with the exception of Trodelvy and Biktarvy, with the latter expected to face increasingly more difficult year-over-year comparisons," he said in a report.
Trodelvy, a bladder and breast cancer treatment, generated $283 million in sales, skyrocketing 57%. Total cancer treatment sales climbed 33% to $769 million, but were below FactSet-polled analysts' call for $788 million.
HIV Treatment Sales Mixed
HIV treatment Biktarvy brought in $3.09 billion in sales, growing 11.5% and beating expectations that ranged from $2.86 billion to $3.08 billion, according to analysts' reports. Revenue from Descovy, another HIV drug, was soft at $511 million. Descovy sales climbed 2.2% vs. the year-earlier period.
"We note the company indicated some of this (Biktarvy beat) was likely due to inventory and channel dynamics," RBC's Abrahams said. "The rest of the HIV franchise was in-line or slightly lower than our/Street estimates despite also benefiting from (favorable) channel dynamics."
Abrahams kept his sector perform rating and 78 price target on GILD stock.
Boylan, the Edward Jones analyst, says Gilead stock is now fairly valued.
"Overall, we believe Gilead is making the right steps to diversify its business, such as with cancer," he said. "We also like that it is spending more in research and development to support that diversification. However, these efforts will likely take some time, effort and costs before that goal is fully realized."
Guidance Boosted
Gilead raised its outlook for the year and now expects $26.7 billion to $26.9 billion in product sales, which exclude licensing and other sources of revenue. Gilead also expects Veklury to generate $1.9 billion in sales, up from the guidance it issued three months ago for $1.7 billion.
Further, the company expects to earn $6.65 to $6.85 per share, on an adjusted basis.
Follow Allison Gatlin on X, the platform formerly known as Twitter, at @IBD_AGatlin.
