Please ensure Javascript is enabled for purposes of website accessibility

Why Gilead Sciences Stock Jumped Today

By Keith Speights - Feb 5, 2021 at 3:29PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors liked the big biotech's Q4 update.

What happened

Shares of Gilead Sciences (GILD -0.21%) were trading 4.8% higher as of 3:02 p.m. EST on Friday. The gain came after the company announced its fourth-quarter results following the market close on Thursday. 

So what

Gilead easily topped the consensus Wall Street earnings estimate for the fourth quarter. However, investors were probably even more upbeat about the company's 2021 guidance.

$1 bill folded into the shape of an arrow pointing up

Image source: Getty Images.

The big biotech looks for full-year revenue between $23.7 billion and $25.1 billion. COVID-19 therapy Veklury (remdesivir) will likely generate between $2 billion and $3 billion of the company's total revenue this year. Gilead also expects its adjusted earnings per share will come in between $6.75 and $7.45. The midpoint of this range is higher than the average analyst estimate of $6.85.

It's understandable why investors would cheer Gilead's return to growth. However, there are still a few warning signs for the company. HIV sales are under pressure due to generic competition for Truvada despite strong sales growth for Biktarvy and Descovy. Gilead's hepatitis C virus franchise continues to flounder. And while its cell therapies are gaining traction, the total sales of the biotech's two products amount to only a small fraction of its overall revenue.

Now what

What could potentially keep today's momentum for the biotech stock going? Continuation of the solid launch of Trodelvy, a breast cancer drug picked up with Gilead's acquisition of Immunomedics, would help. The drug generated $49 million in sales in Q4.

It's also possible that further acquisitions could provide catalysts for Gilead. CEO Daniel O'Day has demonstrated that he's willing to invest in bolstering Gilead's pipeline, especially in the oncology arena. There's a real possibility that he could use some of Gilead's cash stockpile of $7.9 billion to buy smaller biotechs or forge collaboration deals.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Gilead Sciences, Inc. Stock Quote
Gilead Sciences, Inc.
GILD
$62.24 (-0.21%) $0.13

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
345%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/16/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.