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Why Gilead Sciences Stock Jumped Today

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

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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.

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