Justin Sullivan
Gilead Sciences (NASDAQ:GILD) lost ~4%, marking the biggest intraday decline in more than a year after the antiviral drugmaker reported better-than-expected Q3 2023 financials, which, according to Wells Fargo, indicated “a low-quality beat.”
While the company’s topline grew ~1% YoY to $7.1B and its non-GAAP diluted earnings rose ~21% YoY to $2.29 per share as sales from its COVID-19 therapy Veklury exceeded Street forecasts, according to Bloomberg data, to reach $636M despite ~31% YoY decline.
However, the company’s HIV franchise mostly underperformed, even as key revenue generator Biktarvy added $3.1B to the topline with ~12% YoY growth, while Descovy and Genvoya fell short of estimates, bringing $511M and $503M, respectively.
While GILD’s operating margin reached ~46% from ~47% in the prior year, its net income rose ~21% YoY to $2.2B as the company benefited from a low effective tax rate of ~6% compared to ~27% for the same period in 2022.
Gilead (GILD) also raised its full-year outlook for total product sales to $26.7B–$26.9B, up from $26.3B–$26.7B, and lifted Veklury sales guidance to $1.9B, up from $1.7B previously.
Wells Fargo analyst Mohit Bansal called GILD’s Q3 “a low-quality beat as topline beat was driven by Veklury while bottom-line was helped by one-time tax benefit.”
“We still think GILD’s outperformance from here could be driven by HIV, but catalysts in 2024 may not be needle-moving,” Bansal added with an Equal-Weight rating and a $90 price target on the stock.
Meanwhile, Mizuho analyst Salim Syed, with a Buy rating and a $101 per share target on the stock, offered a slightly different view, noting that GILD’s Q3 “looks fine, but beat and raise only driven by Veklury seemingly.”