By Ben Levisohn
Gilead Sciences (GILD) reports earnings on Feb. 7–which means that analysts everywhere are trying to predict what its numbers and guidance might look like. But there’s one thing everyone seems to agree with: Predicting hepatitis-C revenue and guidance is very, very hard. Last week, RBC’s Michael Yee and team noted that “visibility is tough on Hepatitis C right now,” and today Credit Suisse analyst Alethia Young and team note their agreement:
Gilead- we think it will be difficult for the company to guide the HCV business as patient starts remain difficult to forecast. Numbers have come in for Gilead which helps for the set up into the guidance announcement. Our 4Q EPS is $2.71/sh higher than $2.55/sh consensus driven primarily by higher HIV revenues. Our total revenues for 4Q are $7,358M above of $7,138M consensus. We are $80M above on Genvoya with $630M vs. $550M consensus. Our Harvoni estimate is $1.65B slightly above $1.62B consensus. It looks like HCV consensus has come in meaningfully in the last month or so which we think is good for the stock set up for the year. Our 2017 Harvoni estimate is $5.82B slightly below $5.88B consensus. In October 2016, Harvoni consensus for 2017 was $8.7B vs. now it is at $5.88B so consensus has come in by approximately $3B since after 3Q. For 2017, we are below on both the top and bottom line – we model total revenues of $26.47B below $28.18B consensus and of EPS is $10.56 below consensus of $10.73 consensus. For the HIV business, we have $13.7B in 2017 which is 6% growth vs. 2016 estimate. For the HCV business we estimate sales fall 30% to $10.3B in 2017. From the analyst event at JPM (link to note) the company themselves are open about the fact that they have little visibility into the number of HCV patient starts which could make providing guidance for that area of the business challenging. As we have previously written in our outlook piece, we think we might see a guide of $26-$27B for 2017 product sales (slightly lower than total revenues) if the company guides for the whole business.
Shares of Gilead Sciences have fallen 0.6% to $70.59 at 10:28 a.m. today, while the iShares Nasdaq Biotechnology ETF (IBB) has declined 0.5% to $272.12.