More Explanations Due From Gilead

  • GILD reports earnings after-hours.
  • Remdesivir could revive growth in the short term. However, revenue from HIV and HCV could be dead for now.
  • GLPG’s R&D pipeline has suffered some setbacks and may not be the boon GILD once thought.
  • The IMMU deal could limit GILD’s ability to go elephant hunting in the future.
  • GILD needs more explanations this quarter. I rate the stock a hold.
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Gilead (NASDAQ:GILD) reports earnings Wednesday after-hours. Analysts expect revenue of $6.39 billion and EPS of $1.95. The revenue estimate implies a double-digit percentage decline sequentially. Investors should focus on the following key items.

Stagnant Revenue Growth

It is difficult to recommend the stock of a company whose revenue growth is flat to declining. Gilead’s revenue growth has been stagnant for several quarters. Its R&D pipeline does not appear to be that promising at the moment. In Q2, the company reported revenue of $5.1 billion, down 7% sequentially and down 10% Y/Y.

Gilead Q2 2020 revenue growth. Source: Shock Exchange

Revenue from HIV and HCV fell 3% Q/Q and 39% Q/Q, respectively. While COVID-19 has helped boost sales of remdesivir, it has also hurt the company in other areas. Biktarvy, previously a stalwart for the company, experienced a 5% revenue decline Q/Q. Gilead experienced a reversal of the pandemic-related stocking that occurred in Q1, which may have made Q1 results appear more robust than normal: