What to Expect From Gilead Sciences Inc.'s Q2 Results

Source: Gilead Sciences.

Big biotechGilead Sciences announces its second-quarter results after the market closes on Tuesday, July 28. If history is a reliable guide, investors don't have reason to be too nervous about the company missing earnings estimates. You can't count on the past to predict the future, though. Here are three scenarios that could potentially play out with Gilead's earnings release.

1. High fivesGilead's first-quarter revenue and earnings blew past most analysts' estimates. Don't be surprised if the biotech is able to do it again. Wall Street expects Gilead to report second-quarter revenue of $7.61 billion and earnings of $2.70 per share. To hit these marks, hepatitis C drugs Harvoni and Sovaldi need to have produced strong sales results during the quarter.

Harvoni provided a large upside surprise in the first quarter with $3.5 billion in sales. Sovaldi contributed another $972 million. The key to a repeat performance could ride on how well Gilead's efforts to promote usage of its hep C drugs in Europe pay off.

2. Ho-humBarely meeting expectations might be the most likely outcome for Gilead. Observers closely watch weekly prescription data for the biotech's top drugs. So far, signs seem to indicate that there won't be any major shocks in store with second-quarter results.

Gilead could have a so-so quarter even if Harvoni and Sovaldi sales are solid. Roughly 40% of the company's total revenue stems from other drugs, especially those within Gilead's HIV franchise. In the first quarter, those HIV drugs, led by Truvada and Atripla, claimed year-over-year growth of 9%. That's certainly not bad, but it's not exactly sizzling. Weak growth in HIV could prove to be a drag for Gilead.

3. Heave-hoThere's also a possibility that Gilead's shares will tank after second-quarter results are announced. If that happens, the most likely culprit won't be an earnings or revenue miss but rather a downward revision to full-year projections. Pessimism about the future from management never fails to send investors to the sidelines.

Last quarter, Gilead bumped its revenue estimates for 2015 up by $2 billion. However, it held its earnings outlook steady at$0.82 to $0.87 per diluted share. Will Gilead lower projections this quarter? Probably not, but it's not out of the question.

Unlike HIV, Gilead doesn't have the hepatitis C market largely to itself. AbbVie's Viekira Pak has won favor with some payers. At least one investment firm, BMO, thinks the AbbVie hep C regimen might gain more market share than expected after a late-stage study showed 100% cure rates in patients with genotype-1b.

Best betWe'll know soon which scenario proves most accurate. The best bet for investors, though, is to not worry too much about results from a single quarter and instead focus on the long term.

Look at Gilead's potential in its powerhouse HIV and hepatitis C franchises over the next several years. Look at its pipeline of up-and-coming drugs in those indications plus others, including NASH and various types of cancer. Look at its huge cash stockpile of over $14 billion and consider the past history of the biotech in investing its money on new drug candidates. The long-term scenario is ultimately the one that really matters.

The article What to Expect From Gilead Sciences Inc.'s Q2 Results originally appeared on Fool.com.

Keith Speights owns shares of Gilead Sciences. The Motley Fool recommends Gilead Sciences. The Motley Fool owns shares of Gilead Sciences. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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