Why Gilead Sciences (NASDAQ: GILD), Allergan (NYSE:AGN) and Time Warner (NYSE: TWX) are falling today

Gilead Sciences

Gilead Sciences (NASDAQ: GILD) stock is trading subdued today as the group reported a Non-GAPP $2.75 earnings per share for the quarter, missing analysts’ expectation of $2.87 per share.  Gilead Sciences reported a revenues of $7.40 billion for the quarter as compared with analyst estimates of $7.47 billion. Gilead Sciences reported a RoE of 106.75% and net margin of 50.50%. The company reiterated their full year outlook of $29.5 billion – $30.5 billion in revenues versus analyst expectations of ~$30.37 billion.

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Product sales for the third quarter of 2016 were $7.4 billion as compared to $8.2 billion for the same period previous year. The US reported sales of $5.1 billion, and that from Europe was $1.4 billion, while Japan accounted for $452 million. Over $479 million was contributed by other locations. The product sales for corresponding quarter were at $5.6 billion in the US, $1.7 billion in Europe and $454 million in Japan. The antiviral product sales  $6.8 billion for the third quarter compared with $7.7 billion in corresponding quarter. HIV and other antiviral product sales were $3.5 billion Vs $2.9 billion in corresponding quarter.

R&D expenses and non – GAPP R&D expenses were higher due to the progression of Gilead’s clinical studies and also a $200 million towards the purchase of Nimbus Apollo Inc.

On the other hand, management said that they are well positioned to leverage its growth pharma strategy to deliver strong durable topline growth, powered by growing franchises, enhanced category leadership driven by innovative, high value treatments, develop new treatments from our Open Science R&D pipeline, enhance our commitment to customer intimacy and continue to support growth through operational excellence.

The stock is trading at attractive levels wherein the 1year-forward P/E is 6.49x. Analysts continue to bullish on the stock, as Ian Somaiya from BMO Capital upgraded the stock today. Gilead stock has an upside potential of 39.3% with an average price target of $101.63 as per tipranks.com

Allergan Plc

Allergan plc Ordinary Shares (NYSE:AGN) stock fell over 4.6% (as of mid-session) as the group reported a lower than estimated performance. The group reported a GAAP continuing operations loss per share of $1.15 and non- GAAP adjusted diluted net income per share of $3.32.  The company reported a GAAP Q3 2016 operating loss from continuing operations of $266 million and Non-GAAP adjusted operating income from continuing operations of $1.78 billion.  Adjusted revenue growth over previous year was at 7.4% with key promoted brands continuing to grow at double-digit rates.

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Allergan expects full year revenue to be between $14.45 billion and $14.65 billion compared to the FactSet consensus of $14.73 billion. The company expects full year adjusted EPS in the range of $13.30- $13.50 per share.

The company also said it would initiate a quarterly dividend of 70 cents per share starting in March. Allegan has finished the $5 billion share purchase program. The company further intends to buy back an additional $8 billion worth of shares by the end of this month as part of its newly announced $10 billion accelerated stock buyback program.

Even Allergan looks like an attractive bet with the stock trading at y-year forward P/E of 14.98x. Wells Fargo reiterated their “Buy” rating today while the consensus price target is $305 with Strong Buy rating, based on tipranks.com

Time Warner Inc.

Time Warner Inc (NYSE: TWX) stock is also subdued today. The group reported an adjusted earnings of $1.83 per share on $7.2 billion in revenue beating analyst expectation of $1.37 per share in earnings and $7.01 billion in revenue. The corresponding quarter reported revenues of $6.56 billion. Turner revenue grew to $2.6 billion while Warner Bros revenue rose to $1.4 billion. Home Box office revenue increased to $1.4 billion while intersegment eliminations improved to -$271 million. Time Warner’s GAAP earnings rose to $1.87 per share from $1.26 per share in the corresponding quarter.  The adjusted operating income grew 12% to $2.1 billion from increase at all its operating divisions and lower intercompany eliminations. Free cash flow totaled $3.3 billion, recording a rise of 15%.

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Time Warner increased its 2016 full year business outlook and expects full year adjusted EPS in the range of $5.73- $5.83. This outlook includes a $0.28 net tax benefit recognized in the third quarter of 2016 related to an internal revenue service approved tax accounting method change. Excluding this benefit, the outlook for 2016 adjusted EPS would be $5.45-$5.55.

Last month, AT&T announced an $85.4 billion deal to buy Time Warner. The decision unanimously approved by both boards- would give the telecom giant control over cable TV channels such as CNN, HBO and TNT, film studio Warner Bros and other media assets. The deal is expected to face challenges from regulators and has already received scrutiny from politicians.

 

 

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