I'm considering an entry point into Gilead Sciences (GILD) . The company reported earnings Thursday afternoon, and may finally be primed for some upside. The creator of Hepatitis treatments, which turned it into a juggernaut name within biopharmaceuticals, has struggled in recent years as the sales revenue from its Hepatitis lineup has fizzled.
That tends to be the only drawback of creating a cure for a disease. Your clients are not lifelong customers. What we've seen through the past year has been an unbalanced act where successful gains in revenue from HIV treatments have failed to stem the cannibalization that came from falling Hepatitis sales rates. Well, Gilead's first quarter results might mark signs of a shift in that story.
Total revenue grew modestly to $5.28 billion vs. $5.08 billion last year. Product sales represented $5.2 billion of that revenue stream. To me, Gilead is now an HIV treatment company that is attempting to press its way into arthritis, while also making moves into advanced oncology.
The big revenue, and source of stability that will help GILD perform while working to build up other avenues, is Biktarvy. The company noted that increasing sales volumes of this drug helped the HIV segment increase revenue to $3.6 billion, compared to $3.2 billion in 2018. The 12.5% increase might not be meteoric in comparison to the kinds of growth rates the company once obtained with its Hepatitis treatments, but we're seeing a stabilization here that might finally give Gilead a more predictable performance. Hepatitis C sales decreased to $790 million in the first quarter, versus $1 billion a year ago.
Yescarta, the result of their acquisitions and ventures into gene therapy oncology, has been on the market for awhile. Currently approved for certain lymphomas in the United States and Europe, Yescarta ushered in $96 million in the first quarter vs. $40 million in the first quarter of 2018. Though a small part of its business at present, this is the area that many are eagerly waiting for. Cell treatments for advanced, resistant cancers seem like the way of the future. Who knows where this can lead? Though it's worth noting they are not the only ones doing this type of work.
In the past, I've been very cautious on Gilead. Correctly so, in the sense that the stock has done very little to the upside over the last five years. Now that we've basically seen a bottoming out in revenue, I think GILD might be becoming a good play. The company finished first-quarter 2019 with over $30 billion in cash on hand and has a strong balance sheet. Now that the big sales fallouts seems to be stabilizing, the stock might finally garner a little more confidence from the markets.
For a while now, this has been a cheap stock. Analyst estimates for 2019 put full-year earnings around $6.66 per share. That would give the stock a forward P/E of 9.84x. First-quarter earnings broke down to $1.54 per diluted share. Overall, I think the $6.60 range seems feasible. My big debate will be whether to give this one more quarter, or to get in sooner. I'd very much like to see Gilead build a trend.