Gilead Sciences Inc. (GILD) is all set to announce its first quarter 2011 results on April 20, 2011 after the closing bell. The Zacks Consensus Estimate for the first quarter of 2011 is $ 0.92, representing a year-over-year decrease of 3.2%. Gilead has surpassed earnings estimates in three of the last four quarters with a trailing four-quarter average of 1.4%.
Fourth Quarter 2010 Recap
Gilead reported earnings per share of $ 0.90 for the fourth quarter of 2010, a penny above the Zacks Consensus Estimate and the year-earlier earnings. The lackluster earnings performance was due to lower revenues and higher expenses.
Fourth quarter revenues decreased 1.5% from the prior-year quarter to $ 2 billion. Total revenues only marginally topped the Zacks Consensus Estimate of $ 1.98 billion. (Read our full coverage on the earnings report at Gilead Beats by a Penny.)
Agreement of Estimate Revisions
Estimate revisions for Gilead have been scarce over the past month. Over the past thirty days, only two of the 9 analysts covering the stock for the first quarter of 2011 have revised their earnings estimates. Both analysts have trimmed their estimates. The annual estimates for 2011 too have not been revised by a majority of the analysts. Only 2 of the 10 analysts following Gilead for 2011 have revised their estimates (one in either direction).
We note that many analysts following the stock had revised their estimates downward following the release of the fourth quarter 2010 results. The downward bias was attributable to the disappointing performance in the final quarter of 2010. As the estimates have already been revised, the stock has not seen significant estimate revisions thereafter.
Magnitude of Estimate Revisions
Estimates for the first quarter of 2011 have remained static over the last 30 days due to the lack of significant revisions by the analysts following the stock. The current Zacks Consensus Estimate for the first quarter of 2011 is $ 0.92. Earnings estimates for 2011 have also remained static over the last 30 days. The current Zacks Consensus Estimate for 2011 is $ 3.87.
Our Recommendation
Currently, we have a 'Neutral' recommendation on Gilead which is supported by a Zacks #3 Rank (short term 'hold' rating). We remain optimistic on the growth potential of Gilead’s HIV franchise drugs, Truvada and Atripla, as well its strong HIV pipeline.
However, the company’s HIV drugs are facing patent challenges from generic companies. Moreover, Gilead’s revenues continue to be unfavorably impacted by pricing pressures in Europe and currency fluctuation.
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