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Gilead Sciences Takes Lumps From Wall Street After Q1 Miss

Big biotech Gilead Sciences ( GILD ) got a downgrade and several price-target cuts Friday after its Q1 report missed expectations , sending its stock tumbling. Maxim Group analyst Jason Kolbert downgraded Gilead to hold from buy, noting that the record-breaking launches of hepatitis C drugs Sovaldi and Harvoni were coming up against competition and tough year-over-year comparisons. “New patient numbers increased … but product margins per patient were lower as a result of: 1) increased HCV price competition ( Merck ‘s ( MRK ) Zepatier); 2) an increased discount rate; and 3) higher-than-expected rebate claims,” Kolbert wrote in his research note. “While management believes that HCV products have stabilized (the U.S. market share is at about 90%), we are not so sure.” Leerink analyst Geoffrey Porges lowered his price target on Gilead to 123 from 127 but maintained an outperform rating. He noted that the company still has a huge reserve of cash, and wrote that the HCV franchise was eroding earlier then expected but it was presumed to decline in a few years anyway. “As a result, our EPS estimates fall 8%-10% through 2017, but only 3% beyond,” he wrote in his research note. UBS analyst Marc Goodman also kept his buy rating while lowering his price target to 118 from 130, writing that he’s “willing to have a little patience.” “The (HCV) category still has years ahead of stable patients,” Goodman wrote. “The issue remains; what’s next? … At this valuation, we will try to remain patient.” Gilead stock was down 7.5% in afternoon trading on the stock market today , below 90. On the positive side for Gilead, the company said Friday that the EU’s Committee for Medicinal Products for Human Use, which advises Europe’s equivalent of the FDA, had endorsed approving Odefsey, the company’s newest four-drug combo pill for HIV. The combo includes TAF, known on Wall Street as “son of Viread” as it represents an upgraded version of Gilead’s legacy blockbuster Viread, which is due to go off patent in the near future.

Amgen Legacy Drugs Drive Q1 Beat; Gilead Hep C Juggernaut Stumbles

Big biotech Amgen ( AMGN ) beat Wall Street’s Q1 estimates and raised guidance Thursday after the close, though its stock went sideways in after-hours trading. Its peer Gilead Sciences ( GILD ), however, was down sharply after a weak quarter. Amgen reported adjusted earnings of $2.90 a share, up 17% from the year-earlier quarter and 30 cents ahead of analysts’ consensus, according to Thomson Reuters. Revenue increased 10% to $5.53 billion, more than $200 million above consensus. The company lifted its full-year guidance, though not by quite as much as the Q1 beat. Its EPS range is now $10.85 to $11.20, up from $10.60 to $11. The revenue guide is $22.2 billion to $22.6 billion, vs. $22 billion to $22.5 billion. Last year, Amgen made $10.38 in EPS on $21.66 billion in revenue. Amgen’s best-selling drug Enbrel, for rheumatoid arthritis, beat expectations by growing 24% to $1.39 billion, almost $140 million above consensus, according to Evercore ISI. Its second-biggest drug Neulasta, for neutropenia, modestly beat estimates by gaining 4% to $1.18 billion. On the other hand, some of Amgen’s newer drugs came up short. Cancer drug Kyprolis grew 43% but was still $19 million shy of consensus with $154 million in sales, while newly launched cholesterol drug Repatha continued its underperformance with a $16 million take. Gilead Takes A Hit In Hep C Gilead, meanwhile, reported earnings of $3.03 a share excluding one-time items, up 3% from last year’s Q1 and 12 cents below Wall Street’s average estimate. Revenue rose 2.6% to $7.79 billion, about $325 million below consensus. Gilead nonetheless made no change to its full-year guidance, calling for $30 billion to $31 billion in product sales and 88% to 90% gross margin. Gilead’s blockbuster hepatitis C drugs Harvoni and Sovaldi accounted for most of the shortfall, though for opposite reasons: Harvoni missed badly in the U.S. but outperformed abroad, while Sovaldi did the opposite. Earlier in the day, AbbVie ( ABBV ) reported that Harvoni’s chief competitor Viekira also came up short of consensus, which the company attributed to Merck ‘s ( MRK ) unexpectedly aggressive pricing of recently launched rival Zepatier. (Merck will report its Q1 on May 5.) The quarter also brought a screeching halt to Gilead’s two-year stretch of double- or triple-digit sales and profit growth, starting with the Dec. 2013 launch of Sovaldi. Analysts expect growth will totally flatten unless the company makes a transformative acquisition. Gilead stock was down more than 6% after hours Thursday, after it closed the regular session down 3.7%, at 97.

Amazon Earnings Top 5 Things You Need To Know For Thursday

On slate for Thursday are quarterly earnings reports from Amazon ( AMZN ), LinkedIn ( LNKD ), Baidu ( BIDU ) and Gilead Sciences ( GILD ) after the close. Before the market open, investors will get their first look at first-quarter economic growth. Amazon The e-commerce giant is expected to earn 58 cents a share in Q1, swinging to a profit from a 12-cent loss last year. Revenue is projected to climb 23% to $27.99 billion. Last quarter, Amazon fell well short of earnings estimates and came up light on revenue, sending shares down as much as 32% from their high in the following weeks. But its cloud computing division, Amazon Web Services, is a bright spot. It hauled in $2.4 billion in revenue for the quarter, up 69% year over year. Shares are flirting with being within the lower boundary of a buy range from a cup-with-handle base with a 603.34 buy point, which it initially broke out of a few weeks ago. Amazon fell 1.7% to 606.57 after falling to 601.28 intraday. LinkedIn The professional social network’s earnings are projected to grow 5% to 60 cents ex items, a sharp drop from the 54% growth that it saw in the prior quarter. Revenue is expected to jump 30% to $828.5 million. Shares dropped 44% on LinkedIn’s last quarterly report, which showed weak Q1 guidance. LinkedIn stock has climbed off of its low, reached in the following days, and is now trading 54% below its 52-week high. Facebook Social networking leader Facebook ( FB ) crushed Q1 earnings and revenue projections late Wednesday, sending shares up 9% in late trade. If Facebook’s positive action continues into Thursday’s session, the stock will likely be in buy range from a cup-with-handle base with a 117.09 buy point. Baidu China Internet giant Baidu is projected to see Q1 EPS ex items fall 11% to 5.96 RMB (92 cents). Revenue is estimated to rise 24% to 15.83 billion RMB ($2.4 billion). Baidu’s mobile ecosystem is strong, according to ITG Research analyst Henry Guo. He said this week that his firm’s data indicates “that Baidu’s Mobile Search app dominates the mobile search market with more than 23% installation penetration among Chinese mobile users, well ahead of its key competitors Sogou Search (1.7%) and Qihoo 360 Technology ( QIHU ) Search (0.2%).” Baidu is trading just below buy range from a cup-with-handle base that it broke out of recently. It’s trading 13% below its 52-week high. Gilead Sciences The biotech’s earnings are estimated to rise 6% to $3.13 a share, slower than last quarter’s 37% growth. Revenue is seen rising 7% to $8.1 billion, also a deceleration from the prior quarter. Comparisons are getting tougher after Gilead earnings and sales skyrocketed on hepatitis C treatments. Gilead retook its 200-day line last week but breached that level in Wednesday’s session. Shares are trading 18% below their 52-week high. Fellow big-cap biotech Amgen ( AMGN ) also reports quarterly results Thursday, with analysts expected a 5% EPS gain. Amgen, which fell 1.1% to 161 on Thursday is near a buy point at 165.33 in cup-shaped base. Before the market open, biotechs Alexion Pharmaceuticals ( ALXN ) and Celgene ( CELG ) report, along with big pharma Bristol-Myers Squibb ( BMY ) and AbbVie ( ABBV ) makes a rival hepatitis C treatment. Q1 GDP After Q4’s OK but not great 1.4% gain, coupled with ongoing issues regarding a strong dollar, weak energy sector and sluggish manufacturing, weak growth is expected in Q1. Wall Street expects a scant 0.7% annualized gain.