Gilead Stock Whiffs, But One Pro Remains Bullish

• Shares of Gilead Sciences, Inc. GILD were trading lower by more than 3 percent Wednesday afternoon.
• The company reported an upbeat third-quarter print, while full year guidance may have disappointed some investors.
• Wendy Lam of Oppenheimer maintained an Outperform rating and $124 price target.

Shares of Gilead were trading lower by more than 3 percent after the company reported a better-than-expected earnings for its third quarter.

Investors and traders appear to have been focusing on the company's net product sales guidance for the entire fiscal year 2015, which was raised to a range of $30 billion to $31 billion (from $29 billion to $30 billion) but still fell short of the $31.5 billion analysts were estimating.

Wendy Lam of Oppenheimer commented on Gilead's "healthy" report. The analyst pointed out that Sovaldi sales of $1.47 billion was higher than the $1.12 billion but Harvoni sales of $3.33 billion fell short of the $3.43 billion analysts were expecting due to moderating trends in early EU launch markets.

Lam still has a "positive outlook" on HCV, especially as Harvoni access continues to improve and the ongoing EU/rest of world rollout moves forward.

Meanwhile, total HIV sales of $2.90 billion was ahead of the $2.72 billion analysts were expecting due to increased VA spending and Atripla/Truvada outperforming despite expectations for "moderating" demand. The analyst highlighted the upcoming Genvoya (E/C/F/TAF) approval (11/5 PDUFA) which could drive further growth, even though the company faces upcoming HIV patent expires.

Lam also added that Gilead's management offered pipeline updates. Within HCV, management believes the triple combo GS-5816/SOF/GS-9857 is more viable as an eight-week (but not six-week) pan-genotypic regimen or as a salvage option. Within HIV, Phase 3 studies of unboosted integrase inhibitor GS-9883 (with an F/TAF backbone) will begin in the fourth quarter which is "slightly faster than expected." Within NASH, results from the simtuzumab 48-week futility analysis will be announced in the fourth quarter.

Finally, Lam noted that the company ended the quarter with $25.1 billion in cash, even after an "aggressive" $3.1 billion was spent on share buybacks in the third quarter. The analyst suggested that this places the company in a "prime position" to pursue another transformational deal in the near term.

Shares remain Outperform rated with an unchanged $124 price target.