Gilead Sciences (GILD) Offers Cautious FY12 Outlook on Euro Market Concern
Thursday, February 02, 2022 8:10 PM

Pharmaceutical company Gilead Sciences (GILD) provided cautious outlook for the year 2012 on the back of some headwinds from the European markets. The company’s fourth quarter adjusted earnings failed to meet analysts’ expectations thereby triggering downfall of the stock in the extended hours trading.

However, the outlook news during the conference call not only brought back the investors sentiments, but also lifted the stock up by more than 6 percent during the after-hours trading.

Q4 Results

The Foster City, California-based Gilead Sciences reported net income of $665.1 million, up 5.7 percent from $629.42 million and earnings grew 14.5 percent to 87 cents a share from 76 cents a share in the year-ago quarter. On an adjusted basis, net income slipped 4.7 percent to $743.1 million from $779.3 million but earnings rose 2.1 percent to 97 cents a share from 95 cents a share in the year earlier quarter.

Total revenues increased 10 percent to $2.2 billion from $2.0 billion in the previous year quarter. Of this, product sales accounted for $2.13 billion, 10.5 percent higher than $1.93 billion in the fourth quarter of 2010. Sales from antiviral product grew 9 percent to $1.86 billion from $1.7 billion on the strength of 12 percent growth in the U.S. and Europe’s 5 percent increase.

Wall Street analysts were expecting the company to deliver earnings of $1.05 a share on revenues of $2.18 billion.

Adjusted product gross margin slipped to 73.4 percent from 75.3 percent in the year-ago quarter.


During the conference call, Gilead provided product sales outlook of $8.6 - $8.8 billion for the year 2012 indicating an increase of 6.2 – 8.6 percent over 2011. The company also expects adjusted product gross margin in the range of 73 – 75 percent. This somewhat unimpressive considering that the company’s 2011 adjusted gross margin was 74.8 percent.

Street analysts’ predict the company to generate revenues of $9.08 billion.

Our Take

The outlook is muted only. Considering that Gilead is offering adjusted gross margin slightly below 2011 level, it could hurt profitability. The company must take efforts to improve its margin, other wise the profit growth might get hampered. In the extended hours trading, the stock breached 52-week high. One can wait for correction before considering entering the counter.