Gilead's PrEP Surge Faces Third-Quarter Test As Stock Presses Toward Its High

Gilead Sciences heads into its third-quarter report with a stock that has already priced in a good deal of the optimism its management generated three months ago. Shares have climbed 15.1% since the last report while the S&P 500 slipped 0.9%, and at $156.51 the stock sits about 2.5% below its post-earnings high of $160.51. A company that raised its HIV outlook twice in a row now has to show that the HIV franchise, and especially its PrEP business, is still accelerating rather than simply holding steady.

The headline numbers look unexciting. Analysts expect earnings of $2.16 per share on revenue of $7.81 billion when Gilead reports after the close on October 29. That works out to a 12.6% drop in earnings from the $2.47 earned a year ago, on revenue growth of just 0.5%. Last quarter's reported loss of $6.75 per share was distorted by $11.2 billion of acquired research charges tied to the Tubulus, Arcelix and Oro deals. That noise should mostly fade this time, but the spending needed to advance those newly acquired programs is one plausible reason the Street sees profit falling even as sales hold flat.

On the full year, Gilead now guides to a GAAP loss of $0.30 to $0.65 per share on revenue of $30.10 billion to $30.40 billion, an improvement from its earlier range. Consensus calls for a loss of $0.78, which is actually below the weak end of management's range, while the $30.38 billion revenue estimate sits near the top. In plain terms, analysts are comfortable with the sales story but have not fully bought the improved earnings outlook. A quarter that tracks toward the company's range would help close that gap. Management also lifted the floor of its ex-deal earnings framework to $8.50 to $8.85, and keeping that floor intact matters more than the GAAP figure.

The operating story runs through HIV. Gilead raised its 2026 HIV growth forecast from 6% to 8% and then to 9% to 10%. PrEP topped $1 billion in quarterly sales for the first time, and Yes2Go grew 40% sequentially to $232 million, putting it on pace for roughly $1 billion this year. Management also cited six-month persistency above 70%, a figure that matters because PrEP economics depend on patients staying on therapy. If Yes2Go keeps posting strong sequential gains and persistency holds, the case for another nudge higher in guidance gets stronger. Flattening Yes2Go growth would cast doubt on the two upgrades. The other HIV question is treatment. Changes to ACA subsidies slowed market growth and weighed modestly on Biktarvy, and management called the effect temporary. Evidence of a return toward normal 2% to 3% market growth would support that view. Further softness would suggest a more lasting problem.

The weaker spots are known but still worth monitoring. Cell therapy fell 14% last quarter, and its outlook worsened to a mid-teens decline. Vecluri guidance was halved to about $300 million. Neither is core, but a further slide would eat into gains elsewhere. Trodelvi, up 26% with new first-line triple-negative breast cancer approvals, and Livdelzi, which more than doubled, are the offsets that should help keep base-business growth near the 10% pace from the second quarter.

Sentiment has warmed from 5.6% to 13.4% bullish, still measured but clearly more constructive, and the stock trades well above its 200-day average of $138.27. That combination raises the bar. The verdict likely rests on whether Yes2Go and the broader PrEP franchise deliver another clear step up while HIV treatment demand steadies. Do both, and the rally has fundamental support and a credible path past its recent high. Fall short, and a stock that has already run may find the good news fully priced in.

This earnings preview was originally published on Earnings Whispers.

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