It has been about a month since the last earnings report for Gilead Sciences (GILD). Shares have lost about 3% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Gilead due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Gilead Earnings Beat, Revenues Miss Estimates in Q1

Gilead delivered earnings of $1.76 per share in the first quarter, up from $1.48 a year ago. The bottom line also beat the Zacks Consensus Estimate of $1.62.

Total revenues of $5.28 billion lagged the Zacks Consensus Estimate of $5.31 billion but inched up 3.8% year over year.

HIV Franchise Sustains Momentum

Product sales came in at $5.2 billion, up 3.8% year over year.

HCV product sales plunged 21% to $790 million, due to lower patient starts and competitive dynamics including a price decline in U.S. Medicare, this year.

HIV product sales increased 12.5% year over year to $3.2 billion, driven by higher sales volume led by the continued uptake of Biktarvy. Sales of Biktarvy surged to $793 million, up from $35 million in the year-ago quarter.

Genvoya generated sales of $1 billion, down from $1.1 billion in the year-ago quarter. Descovy recorded sales of $342 million, down from $361 million in the year-earlier period while Odefsey registered sales of $397 million, up from $342 million in the prior-year quarter.

Biktarvy became the top-selling product in the United States in the quarter under review and remains the number one prescribed regimen for both treatment-naïve and switch patients. Approximately 80% of Biktarvy's U.S. prescriptions comes from switches with about 25% drawn from Genvoya and another 25% obtained from dolutegravir-based regimens. Overall, Descovy-based regimens continue to gain share and now account for approximately 80% of Gilead's total U.S. treatment prescription volume. Truvada, for its use in the pre-exposure prophylaxis setting, consistently maintained a positive momentum with an estimate of 200, 000 patients being administered with the drug by the first-quarter end.

CAR-T therapy Yescarta (axicabtagene ciloleucel), launched in the United States during October 2017 generated $96 million in sales, up from $81 million in the earlier reported quarter, driven by an increase in the number of therapies provided to patients.  Yescarta was also approved in Europe last August 2018.
Other product sales including chronic hepatitis B (HBV) drugs, cardiovascular, oncology and other categories (Vemlidy, Viread, Letairis, Ranexa, Zydelig and AmBisome) were $696 million, down from $745 million in the comparable quarter last year due to the expected decline in Ranexa sales after a generic entry in the first quarter of 2019.

Adjusted product gross margin was 87.3% compared with 86.3% in the year-ago period. Research & development (R&D) expenses increased 7% to $871 million. Selling, general and administrative (SG&A) expenses climbed 8.8% to $962 billion.

2019 Guidance Reiterated

Gilead continues to expect net product sales of $21.3-$21.8 billion. Adjusted R&D and adjusted SG&A expenses are projected to be $3.6-$3.8 billion and $3.9-$4.1 billion, respectively. Adjusted product gross margin is anticipated to be 85-87%.

Dividend and Share Repurchase

During the quarter, Gilead generated $1.4 billion in operating cash flow, repaid $750 million of debt, paid cash dividends of $817 million and spent $834 million on share buybacks.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted 8.99% due to these changes.

VGM Scores

Currently, Gilead has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Gilead has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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