July 19, 2007

Gilead continues impressive growth

Gilead Sciences (GILD) announced another solid quarter Thursday, as the company beat analysts' EPS estimates by $0.03. Gilead reported $0.42 in EPS and $408 million in net income for the second quarter, a 53% year-over-year growth in income. The company recognized $1.05 billion in revenues, a 52% growth, with record products sales of $905 million (53% growth YOY). Sales were driven again by the significant growth of Gilead's HIV franchise, which contributed $762 million in sales, a 60% increase.
Gilead's strong push to diversify is paying off as well, as the company saw growth in each of its product categories. Hepsera sales increased 32% and AmBisome sales increased 16%. The company received $123 million in royalty revenues from Roche for the sales of Tamiflu, which was a 68% growth YOY.
Most importantly to investors, the company also raised its guidance, now predicting $3.6-3.7 billion in product sales for fiscal year 2007 (up from $3.4-3.5). The company also expects to receive a higher royalty rate next quarter from Roche, based on timing of sales.

All-in-all, it was a pretty impressive quarter again for Gilead. Investors should like what happened in the second quarter, and should be excited for the second half of 2007. In addition to the guidance raise, the company said that it will continue to seek ways to increase shareholder value by utilizing the some $2 billion in cash it has on hand. This included seeking acquisitions as well as considering future share repurchases. The company is currently pursuing the marketing launch of Letairis to treat pulmonary arterial hypertension, and Gilead expects sales from Viread for the treatment of Hepatitis B and its new cystic fibrosis drug to begin in the second half 2008, pending the approval by the FDA.

I am happy with what I heard on the conference call, and I will be reviewing my target price for the stock in a future post.

Disclosure: I am long shares of Gilead

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