Biotech bigwig Gilead Sciences, Inc. GILD  is scheduled to report first-quarter 2025 results on April 24, after market close. The Zacks Consensus Estimate for sales and earnings is pegged at $6.83 billion and $1.73 per share, respectively.

Earnings estimate for 2025 has increased to $7.86 from $7.80 per share over the past 60 days, while that for 2026 has increased to $8.30 from $8.12 in the same timeframe. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

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GILD’s Earnings Surprise History

GILD has an excellent track record. Its earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.47%. In the previously reported quarter, the company’s earnings beat estimates by 13.77%.

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What Our Model Predicts for GILD

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP for GILD is +3.07%. The company currently carries a Zacks Rank #3. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Factors Influencing GILD’s Q1 Results

Gilead has a market-leading HIV franchise, led by flagship HIV therapies — Biktarvy and Descovy. Biktarvy sales and Descovy for pre-exposure prophylaxis (PrEP) have fueled GILD’s top-line growth in the past several quarters.

However, the first quarter has likely seen a slowdown due to the impact of the new Medicare Part D model implementation. As per the new model, manufacturers now must provide discounts on the cost of drug for Medicare patients during the initial coverage and catastrophic phases. Secondly, the introduction of manufacturer discounts for people who qualify for the low-income subsidy program might have also had an adverse impact on HIV sales. Since this population is disproportionately affected by HIV, GILD’s HIV business must have suffered due to the larger cost-sharing obligations.

The top-line estimate for Biktarvy and Descovy is pegged at $3.2 billion and $479 million, respectively, and our model estimate for the same is pinned at $3.1 billion and $423.7 million.

The Liver Disease portfolio include drugs for chronic hepatitis C virus, chronic hepatitis B virus and chronic hepatitis delta virus. Higher demand for viral hepatitis medicines has likely boosted sales of this franchise in the first quarter.  

The FDA had earlier 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, under the brand name Livdelzi. Incremental sales from this new drug must have positively impacted the Liver Disease portfolio sales.

Veklury sales continue to be highly variable.

Cell Therapy product sales (Yescarta and Tecartus) have likely decreased in the to-be-reported quarter due to competitive headwinds, both in the United States and internationally.

The Zacks Consensus Estimate and our model estimate for Cell Therapy product sales are pinned at $491 million and $482 million, respectively.

Trodelvy, indicated for second-line metastatic triple-negative breast cancer and pre-treated HR+/HER2- metastatic breast cancer, has likely experienced strong demand in the first quarter. The Zacks Consensus Estimate and our estimate for Trodelvy sales are pinned at $354 million and $349.3 million, respectively.

Both R&D and SG&A expenses might have decreased in the first quarter.

Key Recent Developments

Gilead Sciences’ application for the approval of lenacapavir is currently under review in both the United States and the European Union.

The FDA has granted Priority Review to GILD’s submissions for lenacapavir and set a target action date of June 19, 2025.

The European Commission has granted conditional marketing authorization to seladelpar for the treatment of PBC.

GILD’s Price Performance and Valuation

Shares of GILD have gained 14.4% year to date against the industry’s decline of 7.8%. The stock has also outperformed the sector and the S&P 500 in this timeframe.

GILD Outperforms Industry, Sector & S&P 500

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Going by the price/earnings ratio, GILD’s shares currently trade at 13.13x forward earnings, higher than its mean of 10.53x but lower than 14.49x for the large-cap pharma industry.

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Investment Thesis for GILD

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. While HIV sales might be under slight pressure in 2025, a 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.

The approval of Livdelzi has expanded the liver-disease portfolio.

Gilead’s oncology portfolio, comprising the Cell Therapy franchise and breast cancer drug Trodelvy, has diversified its overall business. The uptake of Trodelvy has been strong.

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 strategic deals and acquisitions to diversify its business are encouraging.

Stay Invested in GILD Stock

Large biotech companies are generally considered safe havens for investors interested in this sector. 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.

However, we recommend investors to wait and watch for now as the HIV business navigates the expected challenges in 2025.
For investors already owning the stock, staying invested would be a prudent move. The company’s attractive dividend yield is a strong positive.

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

 

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This article originally published on Zacks Investment Research (zacks.com).

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