Gilead Sciences Has Snapped Out of Its Slump -- and 1 Catalyst Is Doing Most of the Heavy Lifting
Key Points
Gilead reported big losses last quarter, but this could pave the way for its diversification into oncology.
In the meantime, investors remain focused mostly on the main growth driver: HIV prevention medicines.
Based on 2027 earnings forecasts, this stock may have far greater runway than it seems at first glance.
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After months of sideways price action, Gilead Sciences (NASDAQ: GILD) has started zooming higher. This comes on the heels of the pharmaceutical company's latest quarterly earnings release.
Trading around $130 per share ahead of earnings, the stock has since surged to around $146 per share. Further upside may be in the cards, mostly due to the key factor driving its post-earnings rally.
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HIV drug portfolio sends Gilead soaring
Gilead released its Q2 2026 results on Aug. 4. Admittedly, the earnings release was mixed at best. The biotech reported $7.8 billion in sales, up 10% year over year and ahead of forecasts . The company also recorded a net loss of $8.45 per share.
However, this figure was mainly due to significant in-process R&D charges related to the company's recent acquisition of several biotech companies, including Arcellx. These charges may hurt the bottom line today but could pay off if Gilead's ongoing oncology pivot proves successful.
Based on the stock's post-earnings rally, investors clearly forgave management for the losses, focusing mostly on the key positive with Gilead's latest results: continued success with its HIV drug portfolio. While flagship treatment Biktarvy keeps steadily growing in sales, the main milestone is with Gilead's portfolio of PrEP (HIV prevention) medicines, which hit over $1 billion in quarterly sales for the first time.
The post-earnings takeaway for investors
HIV product sales alone grew 12% during Q2 2026, with Descovy sales rising 48% and twice-yearly HIV prevention injection Yeztugo rising from just $15 million to $232 million. Better yet, management anticipates continued growth in the HIV drugs segment, including the prospect of Yeztugo reaching blockbuster status, with annual sales over $1 billion.
This, coupled with diversification efforts, points to strong results moving forward. Forecasts already call for Gilead's 2027 earnings to come in between $9.19 and $11.10 per share. This means Gilead could be trading for between 13 and 16 times forward earnings. With established biotech stocks like Amgen trading for nearly 20 times forward earnings, the potential runway for Gilead could prove substantial.
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Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amgen and Gilead Sciences. The Motley Fool has a disclosure policy.
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