Last week, Gilead Sciences, Inc. GILD reported better-than-expected fourth-quarter results. Adjusted earnings per share (EPS) of $1.90 beat the Zacks Consensus Estimate of $1.67. In the year-ago quarter, the company reported EPS of $1.72.

The year-over-year increase in EPS was driven by higher product sales and lower acquired IPR&D expenses.

Total revenues of $7.6 billion comfortably beat the Zacks Consensus Estimate of $7.1 billion. Revenues also increased 6% year over year, primarily due to higher HIV, oncology and liver disease drug sales.

Along with the quarterly beat, investors were impressed by the company's guidance, which was ahead of expectations. Product sales are projected to be between $28.2 billion and $28.6 billion. Adjusted EPS is anticipated to be in the range of $7.70-$8.10.

Consequently, shares of the company have gained 8% since it released fourth-quarter results.

Long-term investors, however, are not focused on a single quarter’s results but on the company’s strong fundamentals.

GILD’s Leading HIV Franchise Drives Growth

Gilead has a market-leading portfolio of HIV treatments. The company’s consistent efforts to develop additional innovative HIV treatments are being appreciated by investors.

GILD’s HIV franchise sales have consistently grown in the last three years, propelling the top line.

With a market share of more than 50% in the United States at the end of the fourth quarter, its flagship HIV therapy, Biktarvy, continues to fuel sales.  

Descovy (FTC 200 mg/TAF 25 mg) for pre-exposure prophylaxis (PrEP) is also witnessing good uptake. It maintained over 40% market share in the PrEP market in the United States.

Gilead’s efforts to innovate its HIV portfolio are impressive. The company’s pipeline candidate, lenacapavir, demonstrated 100% efficacy for the investigational use of HIV prevention in cisgender women.  Data reinforce that twice-yearly lenacapavir could be a highly effective and potentially game-changing HIV prevention option.

Gilead submitted a new drug application to the FDA and a marketing authorization application to the EMA for approval of twice-yearly lenacapavir for HIV prevention.

The successful development and potential approval of lenacapavir for the prevention of the disease should solidify Gilead’s HIV franchise, as lenacapavir needs to be taken twice yearly, unlike daily oral pills.

Gilead is also evaluating investigational regimens for HIV with once-daily, once-weekly and twice-yearly dosing frequencies.

New Drug Approvals Strengthen GILD’s Portfolio

In August 2024, the FDA granted accelerated approval to seladelpar for the treatment of primary biliary cholangitis (PBC), in combination with ursodeoxycholic acid (UDCA), in adults who have had an inadequate response to UDCA or as monotherapy in patients unable to tolerate UDCA.

The candidate was approved under the brand name Livdelzi. In March 2024, GILD acquired CymaBay Therapeutics Inc. for $4.3 billion, adding seladelpar to its portfolio/pipeline. Livdelzi's approval strengthens GILD’s liver disease portfolio and validates its CymaBay acquisition.

The Committee for Medicinal Products for Human Use of the European Medicines Agency (“EMA”) recently gave a positive opinion recommending the approval of seladelpar for the treatment of PBC in the EU. A final decision is anticipated in the first quarter of 2025.

Gilead Sciences recently announced a strategic partnership with LEO Pharma, a Danish company. The deal strengthens Gilead’s inflammation research portfolio by adding LEO Pharma’s preclinical oral STAT6 Program, including targeted protein degraders.

The company had earlier entered into a multi-target research collaboration with Terray Therapeutics to discover and develop novel small-molecule therapies for multiple targets. It also entered into an exclusive option and license agreement with Tubulis to develop an antibody-drug conjugate candidate for a select solid tumor target.

GILD’s Trodelvy Performs Well

Breast cancer drug Trodelvy has performed well since its approval. The FDA recently granted the Breakthrough Therapy Designation to the drug for the treatment of adult patients with extensive-stage small cell lung cancer whose disease has progressed on or after platinum-based chemotherapy. GILD has multiple ongoing studies looking to expand Trodelvy’s label further.

However, Gilead’s efforts to expand Trodelvy’s label suffered a setback due to the failure of its late-stage confirmatory TROPiCS-04 study on Trodelvy in locally advanced or metastatic urothelial cancer. The late-stage study evaluating Trodelvy in previously treated metastatic non-small cell lung cancer also failed.

GILD’s Cell Therapy Franchise Faces Challenges

Gilead’s oncology portfolio, comprising the Cell Therapy franchise and breast cancer drug Trodelvy, has diversified its overall business. However, the Cell Therapy franchise, comprising Yescarta and Tecartus, is currently under pressure due to competitive headwinds both in the United States and Europe that are expected to continue in 2025.

GILD’s Stock Price, Valuation and Estimate Revision

Gilead Outperforms Industry & Sector

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Shares of this biotech giant have gained 51.3% in the past year against the industry’s decline of 1.8%. The stock has outperformed the sector and the S&P 500 Index in this timeframe.

According to the price/earnings ratio, GILD’s shares currently trade at 13.27x forward earnings, lower than the large-cap pharma industry’s average of 16.39X but higher than its mean of 10.53.

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The bottom-line estimate for 2025 has risen from $7.60 to $7.80 per share while that for 2026 has increased from $7.93 to $8.12 over the past seven days.

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Invest in GILD

Gilead’s efforts to constantly innovate its HIV portfolio should enable it to maintain growth amid competition from GSK plc GSK. The company’s strategic deals and acquisitions to diversify its business are encouraging.

GILD has also collaborated with Merck MRK to evaluate the investigational combination of islatravir and lenacapavir for the treatment of HIV. Recently reported data showed that a treatment switch to an investigational oral once-weekly combination regimen of islatravir and lenacapavir maintained viral suppression in adults at week 48. Islatravir is Merck’s investigational nucleoside reverse transcriptase translocation inhibitor (NRTTI) under evaluation in multiple ongoing early and late-stage clinical studies in combination with other antiretrovirals for the treatment of HIV-1.

Despite the recent rally, we believe there is more room for growth buoyed by solid fundamentals and recent positive estimate revisions. Gilead has been consistently increasing and paying out dividends. Gilead announced that its board has declared an increase of 2.6% in its quarterly cash dividend, beginning the first quarter of 2025. The increase should result in a quarterly dividend of 79 cents per share of common stock.

Its strong cash position (as of Dec. 31, 2024, GILD had $10 billion of cash, cash equivalents and marketable debt securities) indicates that the current yield of 2.96% is sustainable.

Gilead currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

 

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