Gilead Sciences Inc. (NASDAQ: GILD) – Q4 FY 2010 Earnings On January 25
Monday, January 24, 2011 4:12 PM

Biopharmaceutical company Gilead Sciences Inc. (NASDAQ: GILD) will report its Q4 FY 2010 earnings on January 25, 2011. In the last three quarters of FY 2010 ended September 2010, Gilead's reported EPS exceeded analysts' consensus estimates in quarters ended March 2010 and September 2010, by margins of 3.10 percent and 3.40 percent, respectively. For the quarter ended June 2010, the company's reported EPS missed analysts' estimate by margin of 2.30 percent.

Gilead Sciences Inc. specializes in the development and commercialization of drugs for the treatment of HIV, hepatitis B infection, cystic fibrosis, fungal infections, and influenza A and B. The company's products include Truvada, Atripla, Viread, Emtriva, Hepsera, AmBisome, Letairis, Ranexa, Vistide and Cayston. The company has sales operations, with marketing subsidiaries in Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.

Q3 FY 2010 results better than the same period a year ago

For the third quarter, Gilead reported total revenues of $1.94 billion, up 8 percent compared to total revenues of $1.80 billion for the same quarter of FY 2009. Net income for the third quarter of FY 2010 was $704.9 million, or $0.83 per diluted share, compared to net income of $673.0 million, or $0.72 per diluted share for the same period of FY 2009. The company's product sales increased 13 percent to $1.87 billion, compared to $1.65 billion in the third quarter of FY 2009. As of September 30, 2010, Gilead had cash, cash equivalents and marketable securities worth $5.05 billion compared to $3.90 billion as of December 31, 2009.

On December 20, 2010, Gilead Sciences signed a definitive agreement to acquire Arresto Biosciences Inc., a privately held, development-stage biotechnology company focused on medicines to treat fibrotic diseases and cancer. Under the terms of the agreement, Gilead will acquire Arresto for $225 million and potential future payments based on achievement of certain sales levels. The deal is expected to close in the first quarter of FY 2011.

Gilead faces strong competition from Bristol-Myers Squibb Co. (NYSE: BMY) and GlaxoSmithKline Plc (NYSE: GSK). In the last one year, Bristol-Myers reported earnings of $5.92 per shares, on revenues of $7.98 billion. GlaxoSmithKline reported earnings of $2.45 per share on revenues of $46.53 billion. On the other hand, Gilead reported earnings of $3.41, on revenues of $7.98 billion.

The company has a P/E ratio of 11.28, lower than the industry's P/E of 19.13. Gilead Sciences' P/S ratio stood at 3.48 compared to industry's 10.48. The quarterly revenue growth of Gilead is 76.86 percent, compared to industry's quarterly revenue growth of 19.80 percent.

Analysts' estimate flat Q4 results compared to Q4 of FY 2009

For the fourth quarter ending December 31, 2010, analysts' EPS estimates range from a low of $0.88 to a high of $1.03 per share, compared to the consensus estimate of $0.94 or year ago same quarter loss of $0.93 per share. Analysts' revenue estimates for the fourth quarter range from a low of $1.89 billion to a high of $2.17 billion, compared to a consensus estimate of $1.99 billion or $2.03 billion reported in the same quarter a year ago. For the quarter ended December 31, 2010, the consensus EPS forecast has remained constant at $0.94 per share for the last 60 days.

In October 2007, the company's board of directors authorized a program for the repurchase of its common stock in an aggregate amount up to $3.00 billion. As of December 31, 2009, the company completed all share repurchases under this program. In January 2010, Gilead's board of directors authorized a new program for the repurchase of its common stock in an amount of up to $1 billion. The company completed the repurchase of stock under the $1 billion repurchase program in April 2010. In May 2010, the company announced another $5 billion stock repurchase program, of which Gilead has repurchased approximately $2.41 billion in common stock through September 30, 2010. Total purchase activity was $1.55 billion in common stock for the third quarter of 2010. The company has never paid cash dividends on its common stocks since its inception. In the last 52 weeks, the stock has been trading in the range of $31.73 and $49.50. The stock has been trading way below its 52 weeks high, and based on the EPS estimates and key financials of the company, I set a one year target price of $45 for Gilead's stock.



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