Gilead's 2017 Guidance Sank Shares To A New Bottom

Shares of Gilead Sciences, Inc. GILD are set to open on a new 52-week low following its lower-than-expected 2017 revenue forecast on weaker Hepatitis C sales.

Gilead provided fiscal year 2017 revenue guidance of $22.5 billion–$24.5 billion, well below consensus at $27.9 billion. This is largely due to the company's view on Hep C product sales of $7.5 billion–$9 billion. Baird believes it would be a “six-sigma event” for the biotech company to come in below this guidance.

But, guidance for non-Hep C sales of $15 billion–$15.5 billion also looks a little light amid headwind of Truvada and Viread going generic ex-United States in the second half of 2017.

Analyst Commentary

“Gilead is known for providing conservative guidance but this is so far below estimates it is already controversial. Are they setting up the stock to actually work again or are they really staring into a black hole?” analyst Brian Skorney wrote in a note.

Skorney, who has an Outperform rating on the stock, sees fiscal year 2017 Hep C sales of $9.8 billion, down 35 percent year-over-year. The analyst noted that he sees no signs of accelerating declines in Hep C sales as projected by the company, which assumes Hep C revenue declines in the 15–20 percent per quarter versus the average 10 percent per-quarter last year.

Skorney is bullish on the name, saying the Street has become overly bearish on magnitude of declines and ignoring solid fundamentals for dominant market-leading HIV franchise.

“That being said, the outlook will certainly lead to some sizeable downwards estimate revisions, including our own target price, which we are lowering to $87,” Skorney added.

Shares of Gilead Sciences were trading at a new 52-week low of $66.45.

At last check, shares of Gilead were down 9.93 percent at $65.87.