Baird: Gilead Set For Q1 EPS Miss, But Hep C Trends Still Good Long-Term

The first quarter earnings of Gilead Sciences, Inc.

may miss Street view, but promising Hep C Rx trends drive a positive outlook, according to a note from Baird. Analyst Brian Skorney said: "Our estimate for pro forma fully diluted EPS is $2.92 versus consensus at $3.12. We think this is largely due to differences in Hep C estimates but believe strong HIV sales and a recent uptick in U.S. Hep C Rx trends will maintain the stock's recent strength." Skorney, who has an Outperform rating and $135 target price on GILD shares, noted that though "we expect Hep C sales in the U.S. to be roughly flat quarter-over-quarter (~$2.32B vs. 2.37B in 4Q15), recent trends in scripts have shown promise for an uptick in sales in 2Q." He continued: "In March, new prescriptions popped up to levels not seen since last spring. Further, the launch of Merck & Co., Inc.

's Zepatier, has been uninspiring, diminishing competitive concerns." "If anything, this quarter's Hep C scripts are indicative of Gilead's continued stronghold in Hep C, and leveling off of the Hep C market in the U.S. In addition, U.S. Hep C could be bolstered by the renewed VA budget this quarter," he added. The analyst estimates total Hep C sales in Europe of $1.0 billion versus $846 million last quarter, driven by "improved access and reimbursement in key countries, such as the UK in late 2015." In addition, Skorney expects strong performance from HIV-1 treatment Genvoya. "Script data thus far, has implied that Genvoya's launch is set to significanly outpace that of Stribild. We are projecting sales of $90M versus consensus estimates of $70M for the drug's first full quarter on the market," the analyst added. Shares of Gilead Sciences were up 0.22 percent to $96.04. They have dropped 6 percent this year.