Gilead (GILD) 4th Quarter Earnings: What to Expect

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Gilead Sciences (GILD) will report fourth quarter fiscal 2018 earnings results after Monday’s closing bell. And the company, which has been a leader in curing the world’s diseases, will aim to cure what ails its stock price, which has declined 22% in three years.

To that end, a solid beat on both the top and bottom lines would be just what the doctor ordered. The biopharma specialist, which develops a host of drugs for the treatment of such diseases such as HIV and chronic hepatitis C virus (HCV), has suffered revenue shortfalls from increased competition from the likes of Merck (MRK) and AbbVie (ABBV). Since the stock peaked at around $119 in 2015, investors have lost as much as 50%.

The shares trade today at around $70 and have been seemingly stuck in neutral ever since. On Monday investors will want the management to outline its strategy to better compete in the hepatitis C market and issue guidance that suggests the recent stock increase (up some 11% over the past thirty days) can be sustained. To some extent, Gilead, which raised its fiscal 2018 revenue guidance during the Q3 conference call, has already achieved that.

For the quarter that ended in December, the Foster City, Calif.-based company is projected to earn $1.71 per share on revenue of $5.49 billion. This compares to the year-ago quarter when earnings came to $1.78 per share on revenue of $5.95 billion. For the full year, earnings are projected to be $6.93 per share, down from $8.84 a year ago, while full-year revenue of $21.81 billion would mark a decline of 16.4% year over year.

Despite the expected declines in revenue and earnings, there are reasons investors should remain optimistic that the tide will soon turn. In the third quarter, for example, while the year-over-year decline in the HCV business was disappointing, the results surpassed Street estimates. Gilead reported a 15% revenue decline in Q3, which — when looking deeper — is an improvement from the 22% decline reported in Q1 and a 21% decline in Q2. What’s more, the magnitude of decline in the HCV business was inline with expectations.

On Monday Wall Street will look to see if the HCV business, which has suffered a significant plunge in sales due to new competition and fewer patient starts, can continue to improve. By “improve,” I mean whether the rate of decline will be less than the third quarter. Gilead’s HCV drug, Harvoni, which has been approved in China, may help in stemming the decline.

Gilead CEO John Milligan has been on record as saying the market dynamics of HCV are stabilizing. In other words, Gilead may have seen the worst of its business transition. On Monday, whether from market share gains or via acquisition of new patients, analysts will look for evidence within the company’s metrics. With the shares still down 11% in six months, now would be the time to own GILD, which pays a solid dividend yield of 3.26% — well above the 2.00% average yield of the S&P 500 index.

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

Referenced Symbols: GILD

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