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Gilead Earnings Set For Further Upside On Strong HIV Franchise
  Peter Kang, 04.19.06, 4:49 PM ET
Shares of Gilead Sciences rose 5% on Wednesday after the HIV drugmaker posted first quarter profit above Wall Street's expectations.
Late Tuesday, Gilead Sciences (nasdaq: GILD - news - people ) posted earnings of 59 cents per share on sales of $693 million. Analysts expected earnings of 53 cents per share on sales of $617 million.
"Gilead reported a very strong first quarter that exceeded our expectations from both a sales and earnings perspective," wrote RBC analyst Jason Kantor, in a note to investors.
The company also lifted sales guidance for the HIV franchise by approximately 8% to a range of $1.83 billion to $1.88 billion.
"Excluding the first-quarter upside, guidance may be conservative, given it does not include sales of the triple-combo pill," said Kantor. "We reiterate our outperform rating and believe Gilead will continue to exceed expectations in 2006-07, based on forecast strong top-line and earnings-per-share growth."
The analyst is bullish on the prospects for Gilead's triple combo HIV pill, which combines Viread and Emtriva with Bristol-Myers Squibb's Sustiva. The companies expect to file for U.S. Food and Drug Administration approval in the second quarter.
In addition, the RBC analyst believes Gilead's Emtriva will continue to dominate the market for NRTIs, or nucleoside reverse transcriptase inhibitors.
"Additional upside from Viread in hepatitis B, early-stage candidates in hepatitis C, and Phase III data from the recent investment in Corus Pharma (nyse: CGA - news - people ) in the fourth quarter may provide additional upside," he noted.
Elsewhere, Morgan Stanley noted that royalty payments paid by Roche for influenza treatment Tamiflu could also drive earnings higher. The firm has an "overweight" rating and $70 price target on Gilead.
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