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Gilead: What A Difference An O'Day Can Make

Feb. 07, 2019 4:58 AM ETGilead Sciences, Inc. (GILD)64 Comments
DoctoRx profile picture


  • GILD reported some ugly one-time charges in Q4, but with new management, no one cares.
  • Uncertainties abound - more than usual for this industry - but it's clear that the TAF story for GILD's HIV franchise is playing out well.
  • There's nothing like a new CEO with a track record of success at a larger player to get Wall Street to take a fresh look at a stock.
  • Thus, I would tend to put a positive spin on GILD's troubles as remediable and its strengths as durable.


Gilead Sciences (NASDAQ:GILD) is about to get its third CEO in less than 9 weeks on or about March 1; he will be the fourth CEO in three years. Daniel O'Day, who had the highly prestigious job of running the pharmaceutical division of the world's largest biotech company, Roche (OTCQX:RHHBY) until the end of last year, has a lot of clay to reshape at GILD. It must be more than just wanting to stay close to Genentech that led him to accept the CEO position at GILD. I presume he thinks there is real potential for GILD to shine again. Here is why, with a well-covered dividend yield of about 3.7%, GILD may be interesting as a new-money buy for risk-takers.

HIV franchise - performance and guidance

In Q4, the numbers in the earnings press release do not tell the full story. We get more information from the conference call in this case. While HIV sales were $4.1B, the CFO explained in her prepared remarks that "the quarter also benefited from seasonal inventory purchases and a favorable payer mix" which increased sales by $250 MM. The EVP for commercial operations noted yoy declines of HIV drug sales in Europe, but explained that GILD is awaiting Biktarvy's launch in several major countries, and went to comment in her prepared remarks that "Once Biktarvy is broadly reimbursed and entrenched in the market, we believe our European HIV business will stabilize and return to growth." While GILD has had trouble predicting the sales trajectory of HCV drugs, it's been good or better for HIV.

In its PowerPoint Presentation that accompanies the press release, slide 20 shows GILD guiding for sales growth of about $1.7B for the HIV franchise in 2019 versus 2018. Last year's sales of HIV drugs were $14.6

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This article was written by

DoctoRx profile picture
Over 40 years of investing in individual stocks. Retired physician (cardiologist). Also retired from various roles in the US pharmaceutical industry. Main focus is on growth stocks, mostly biotech and tech, but with fundamental value considerations. Secondary focus on macro trends driving asset allocation.

Analyst’s Disclosure: I am/we are long GILD, ABBV, CELG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Not investment advice. I am not an investment adviser.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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