Leerink’s Geoffrey Porges notes that the second quarter is usually the strongest one for biotech companies. And while he’s expecting good things from companies like Alexion Pharmaceuticals (ALXN), Amgen (AMGN), and Celgene (CELG), he expects Gilead Sciences (GILD) to report “one of the strongest quarters for [its] core franchises in some time.” He explains why:
Q2 is typically the strongest quarter of the year operationally for biopharmaceutical companies, with the most sequential growth over the prior quarter, and the largest associated increases in guidance, and the most potential for reversal of sentiment, of any quarter of the year. While anecdotally investors expect a quiet summer for mid and large cap biotech stocks, frequently this expectation is confounded, with solid absolute and relative returns during July and August based on substantial sell side estimate revisions after Q2 surprises…
Gilead: We increased our overall Q2 revenue forecast by 4% (from $7.9bn to $8.2bn), driven mostly by the continued strength of the HIV franchise but also based on better expected sales for HCV products, including some inventory stocking for Epclusa. Based on our IMS analysis we increased our WW revenue forecast for Harvoni to $2.8bn (+1%). We are now 5% above consensus for Q2 revenue of $7.8bn, and our EPS estimates, which have increased 5% from $3.15 to $3.32, are now 10% above consensus of $3.03. Despite the stock’s tepid performance since Q1, this could be one of the strongest quarters for Gilead’s core franchises in some time.
Shares of Gilead Sciences have risen 0.8% to $84.59 at 11:08 a.m. today, while Alexion Pharmaceuticals has climbed 3.1% to $121.31, Amgen has advanced 0.7% to $155.37, and Celgene has jumped 3.8% to $104.09. The iShares Nasdaq Biotechnology ETF (IBB) has gained 1.9% to $265.20.
Q2 is typically the strongest quarter of the year operationally for biopharmaceutical companies, with the most sequential growth over the prior quarter, and the largest associated increases in guidance, and the most potential for reversal of sentiment, of any quarter of the year. While anecdotally investors expect a quiet summer for mid and large cap biotech stocks, frequently this expectation is confounded, with solid absolute and relative returns during July and August based on substantial sell side estimate revisions after Q2 surprises…
Gilead: We increased our overall Q2 revenue forecast by 4% (from $7.9bn to $8.2bn), driven mostly by the continued strength of the HIV franchise but also based on better expected sales for HCV products, including some inventory stocking for Epclusa. Based on our IMS analysis we increased our WW revenue forecast for Harvoni to $2.8bn (+1%). We are now 5% above consensus for Q2 revenue of $7.8bn, and our EPS estimates, which have increased 5% from $3.15 to $3.32, are now 10% above consensus of $3.03. Despite the stock’s tepid performance since Q1, this could be one of the strongest quarters for Gilead’s core franchises in some time.
Shares of Gilead Sciences have risen 0.8% to $84.59 at 11:08 a.m. today, while Alexion Pharmaceuticals has climbed 3.1% to $121.31, Amgen has advanced 0.7% to $155.37, and Celgene has jumped 3.8% to $104.09. The iShares Nasdaq Biotechnology ETF (IBB) has gained 1.9% to $265.20.
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