Gilead Sciences stock has fallen since remdesivir received emergency-use authorization from the FDA.
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The biotech company Gilead Sciences said that higher-than-expected sales of its Covid-19 antiviral remdesivir allowed it to raise its forecast for its 2020 sales by just over $1 billion, to between $24.3 and $24.35 billion,.
That is up from between $23 billion and $23.5 billion. The company (ticker: GILD) said it expected to report 2020 sales of remdesivir, which is sold under the name Veklury, of between $2.8 billion and $2.83 billion.
In a note Monday, RBC Capital Markets analyst Brian Abrahams calculated that sales of Veklury in the fourth quarter alone were $1.9 billion, roughly twice his estimate of $1 billion. The consensus call among analysts tracked by FactSet was for sales of $961 million.
The surprisingly high remdesivir sales are, among other things, a reminder of the severity of the current wave of the pandemic. In an interview with CNBC on Monday morning, Gilead’s CEO, Daniel O’Day, said that one out of every two hospitalized Covid-19 patients was being given Veklury.
In its Monday morning statement, the company also increased its forecast for non-GAAP diluted earnings to between $6.98 and $7.08 per share, from between $6.25 and $6.60. Gilead plans to announce its fourth-quarter and full-year 2020 results “in the coming weeks,” it said.
While the higher sales are good news for the company, Abrahams and others noted that it may not be a long-term booster for the bottom line.
“Veklury provides beneficial near-term cash flows though [it] also creates tougher [year-over-year earnings per share] comparisons as the revenue stream will likely dwindle as the pandemic potentially wanes over 2021,” Abrahams wrote.
Shares of Gilead were down 0.1% in early trading, while the S&P 500 dropped 0.5%.
In his CNBC appearance, O’Day said that the surge in the number of hospitalized Covid-19 patients in the tail end of 2020 had driven sales of Veklury higher than expected. “We’ve invested a lot in Remdesivir and we’ll continue to invest in Remdesivir,” O’Day said. “Hospitalizations have quadrupled since October.”
Analysts said that the update indicates that, aside from Veklury, Gilead sales fell slightly short of Wall Street’s expectations in the fourth quarter. “Bottom line, Gilead had a 4Q sales beat on Veklury by over $1Bn, but 4Q ex-Veklury product sales slightly missed by $154-179MM vs consensus,” wrote Mizuho analyst Salim Syed.
Gilead shares spiked early last year amid excitement over remdesivir, which was the first antiviral treatment shown to benefit Covid-19 patients. The stock has fallen steadily since the drug received emergency-use authorization from the Food and Drug Administration. Shares of Gilead are down 2% over the past 12 months, and 17.4% over the past six months.
The stock trades at 9.6 times earnings expected over the next 12 months, close to its 5-year average of 9.5 times , according to FactSet. Of the 29 analysts tracked by FactSet who cover the company, 12 rate it a Buy or Overweight, while 15 rate it a Hold, and two rate it a Sell.
Jefferies analyst Michael Yee wrote in a note out Monday that the stock could be headed for a resurgence. “We continue to like GILD as a low-expectations, cheap/inexpensive, turn-around story for 2021 with sentiment pretty low yet a new year on the horizon and business is doing fine,” he wrote.
Write to Josh Nathan-Kazis at [email protected]
