Can Gilead Really Post EPS Growth Above 50%?

Shares of Gilead Sciences, Inc. GILD are down about 1.7 percent on Wednesday afternoon. The company will announce its first quarter financial results on Thursday afternoon, after the market closes.

According to Estimize, both the crowd and experts expect to see more than 50 percent year-over-year EPS growth. In the first quarter of 2014, the company reported EPS of $1.48.

For the first quarter of 2015, the crowd expects consensus EPS of $2.48 on revenue of $7.045 billion, while the Street models consensus EPS of $2.31 on revenue of $6.756 billion.

The graph above shows Gilead’s history of actual earnings, compared to estimates. As can be seen, the company has either met or beat the Street’s estimates over the past eight quarters.

The second graph illustrates the evolution of estimates of the quarter. Both Wall Street and Main Street have been losing confidence over the past few months, and now expect earnings to come in close to last quarter’s EPS of $2.43.

Analysts Disagree On M&A Strategy

In a recent report, Bernstein analyst Geoffrey Porges said Gilead needs to remain focused on its bid for Vertex Pharmaceuticals Incorporated. The analyst assured many investors "remain heavily exposure to mid and large cap biotech stocks" and further consolidation is expected in the industry.

Related Link: What's Wall Street Been Saying About Gilead Lately?

RBC Capital Markets analyst Michael Yee seems to disagree with Bernstein.

A recent Benzinga article notes that, “according to Yee, Gilead should have no issue with paying a price tag of $40 billion to $50 billion to acquire Vertex, but the company could (and may want to) buy ‘a lot of other things.’ The analyst suggested a better strategy would be to acquire 10 different companies at $1 billion to $5 billion each that will create more value versus buying only Vertex."