Shares of Gilead Sciences (NASDAQ:GILD) gained 11.9% over the course of January, according to data from S&P Global Market Intelligence. Why were investors piling into this top biotech stock last month?
Gilead's shares perked up in response to the company's rather upbeat presentation at this year's J.P. Morgan Healthcare Conference, where interim CEO Gregg Alton suggested that the biotech might be able to return to growth in 2019.
Before last month's double-digit gains, Gilead's stock had been stuck in a long-term downtrend, thanks to the company's plummeting hepatitis C sales. However, the biotech seemed to be nearing an inflection point toward the tail end of 2018 because of a bevy of factors -- including exceptionally strong sales for new HIV medicine Biktarvy, improving sales for anti-cancer cell therapy Yescarta, and a stabilizing hepatitis C drug market. And this overtly positive J.P. Morgan conference presentation appeared to indicate that Gilead's comeback story was indeed taking shape.
But then the wheels on this rally abruptly fell off. In early February, Gilead released its fourth-quarter and full-year results, and shares dropped by nearly 4% in the immediate aftermath of this press release. The fly in the ointment was the biotech's underwhelming revenue guidance for 2019. In short, the biotech expects its top line to either fall modestly this year or, at best, come in flat compared with 2018.
Will investors have to wait yet another year for Gilead to return to growth? While the answer isn't readily apparent, there's a good chance Gilead's initial revenue guidance is more of a strategic move than anything else. Gilead, after all, has rolled out conservative revenue projections in the past, only to post stronger-than-expected quarterly results over the entire year. As such, shareholders probably shouldn't lose faith in Gilead's 2019 comeback story just yet.