Gilead swings to a big loss on acquisition expense, stock falls after earnings and revenue miss

Shares of Gilead Sciences Inc.

fell more than 1% in after-hours trading Thursday after the drugmaker reported that it swung to a large loss during the second quarter and missed estimates even after adjusting for an acquisition.

Though the drugmaker’s COVID-19 drug remdesivir will likely be a major topic during the company’s call with investors, the company has not recorded any sales for the medication, given that it had donated the drug for free through June.

Gilead reported a loss of $3.33 billion, or $2.66 a share, in the second quarter of 2020, compared with a gain of $1.88 billion, or $1.47 a share, in the year-ago quarter. Gilead attributed the quarter’s loss to a $4.5 billion charge for the company’s acquisition of immuno-oncology company Forty Seven Inc. in April.

After adjusting for that charge and other factors, Gilead reported earnings of $1.11 a share, which failed to hit analysts’ average estimates. Revenue fell to $5.14 billion in the quarter, down from $5.68 billion in the like quarter a year ago. Analysts surveyed by FactSet had estimated adjusted earnings of $1.47 per share on revenue of $5.28 billion.

“The drawdown of 1Q’s accelerated purchases and one-time items, coupled with remdesivir investments and expected lower PrEP/[hepatitis C] usage, hampered 2Q20 numbers even more so than expected,” RBC Capital Markets’ Brian Abraham told investors on Thursday.

When Gilead reported its first-quarter results, it had not yet received emergency authorization from the Food and Drug Administration for remdesivir, its experimental treatment for patients with COVID-19. Per the terms of the emergency use authorization granted on May 1, the U.S. government is charged with dispensing the medication, though Gilead has also established supply agreements with other countries, and the drug has received full regulatory approval in markets like Japan under the name Veklury.

Gilead said Thursday that it expects to produce more than 2 million courses of remdesivir by the end of the year. Its research and development costs for the quarter soared to $1.3 billion, up from $995 million in the second quarter of last year, with the company citing higher clinical trial and manufacturing expenses related to remdesivir.

It is unclear whether remdesivir will be a moneymaker for the drugmaker, though some analysts have predicted at least $1.5 billion in sales of the drug this year alone. Gilead has also recently announced that it will study the infused drug in pregnant women, in children, in combination with other treatments, and in an inhaled format.

Like many pharmaceutical companies, Gilead is seeing a decline in sales of drugs during a quarter in which people around the world stayed at home to prevent the spread of the coronavirus.

Sales of HIV drugs were $4.0 billion for the quarter, compared with $4.01 billion a year ago, as some medications saw a boost in sales while others declined.

Sales of Descovy rose to $417 million in the second quarter, compared with $358 million in the same quarter a year ago, while sales of Truvada, which is prescribed sometimes for pre-exposure prophylaxis (PrEP), were halved, tumbling to $387 million during the last three months, compared with $718 million in the same period a year ago. The company cited lower PrEP demand as a result of the pandemic, “driven by reduced initiations and therapy discontinuations due to reduced [health care provider] visits and impact on social dynamics.”

SVB Leerink’s Geoffrey Porges had told investors last week to expect sales of Gilead’s HIV prevention drugs “to be materially lower than prior periods given social distancing.”

Gilead’s stock is up 10.9% since the start of the year, while the broader S&P 500

has gained 0.8%.

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British American Tobacco reports first-half profit rises despite volume decline

(FILES) This file photo taken on September 25, 2014 shows a packet of Camel cigaretes taken in Paris.

joel saget/Agence France-Presse/Getty Images

British American Tobacco said its first-half profit edged higher, as sales of higher-priced items and cost cuts offset a fall in volume.

British American Tobacco


said its profit from operations rose 3.3% to £5.37 billion, with revenue up 1.1% to £12.27 billion. Its adjusted EPS of 157.8 pence came in ahead of a FactSet-compiled analyst estimate of 156.54 pence on sales of £12.16 billion.

In early London trade, British American Tobacco shares rose 1%.

Volume fell 6.3%, which the company blamed on international travel restrictions, but a greater proportion of higher-priced cigarette sales helped revenue to rise.

The company highlighted its “new categories” revenue growth of 14.7%, which includes 9.1% growth for tobacco heated products, 41% growth in vapor and 67% growth in what it calls “modern oral.” Kingsley Wheaton, the company’s chief marketing officer, in an interview with MarketWatch said that was a sign its multi-category strategy was working.

The company reiterated it expects revenue growth between 1% and 3% for the year at constant currencies — it had lowered that target in June — and mid-single figure adjusted EPS growth. The company said U.S. industry volumes will fall 2.5% instead of a previously estimated 4%, citing the continued resilience of consumer demand and higher trade stock levels being maintained as a result of COVID-19.

Its Kentucky BioProcessing division has applied and is awaiting U.S. Food and Drug Administration approval to start a trial of its COVID-19 vaccine, Wheaton said. He said that approval to begin testing could be “pretty imminent.”

The unit already has FDA approval to test an influenza vaccine. British American Tobacco had announced in April that it was trying to create a COVID-19 vaccine and that its work there would be on a not-for-profit basis.

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EA rides pandemic-fueled increase in videogame playing to record first quarter results

Electronic Arts, Inc., maker of “Madden NFL,” reported its best first-quarter earnings ever on Thursday, July 30, 2020.

Getty Images for EA Sports Bowl at Bud Light Super Bowl Music Fest

Electronic Arts Inc. on Thursday reported its best first quarter in history, with earnings and revenue that beat Wall Street expectations on the strength of increased player engagement during the COVID-19 pandemic.

The videogame maker also said it has added tens of millions of new players as more people are staying home, and that demand for flagship games such as “Madden NFL,” “FIFA,” “The Sims” and more is unprecedented.

“We expect these trends to continue during and after the pandemic,” said CEO Andrew Wilson on the company’s earnings call.

For more: Videogames are flourishing in the pandemic, and game makers aren’t scared of the future

EA EA did not release new games in the quarter, but “Madden NFL 21” is scheduled to launch Aug. 28. Shares climbed slightly after hours, less than 0.5%, following a 1.9% increase in the regular session to close at $138.59.

The Redwood City-based company reported first-quarter net income of $365 million, or $1.25 a share, compared with $1.4 billion, or $4.75 a share, which included one-time tax benefits, in the year-ago period.

Revenue rose to $1.46 billion from $1.21 billion in the year-ago quarter. Analysts surveyed by FactSet had forecast earnings of 80 cents a share on revenue of $1.05 billion.

The company reported adjusted earnings of $1.42 a share on net bookings, which is the amount of products and services sold digitally or physically, of $1.39 billion in the quarter. Net bookings for the past 12 months was $5.98 billion, up 17% year over year, the company said.

EA expects second-quarter earnings of 21 cents a share on revenue of $1.125 billion.

Shares of EA are up 29% this year, while the S&P 500

is up 1.9%.

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Deodorant sales fall due to social distancing but locked down consumers send ice-cream sales soaring, says Unilever

People socializing less and working from home caused a slump in demand for personal care items like deodorant and makeup, consumer goods giant Unilever

said on Thursday.

The firm, which owns Dove soap and Axe deodorant, as well as hundreds of other brands, said lockdowns led to a drop-off in sales for personal care items. 

Read: European stocks open higher, led by Unilever, Daimler

But Unilever, which also owns Ben & Jerry’s and Magnum, said locked down Americans ramped up their ice cream consumption, enjoying at-home eating while staying indoors to control the spread of coronavirus. 

Its sales through restaurants and cafes fell by almost a third, but that was offset by heightened demand for food at home, including Ben & Jerry’s ice cream. 

“Sales of ice cream for consumption in-home increased by 15% in the first half and by 26% in the second quarter, significantly offsetting the declines in out-of-home channels,” it said. 

The FTSE 100 firm updated investors on Thursday with its results for the second quarter ending on June 30, showing surprisingly strong performance. 

It comfortably beat analyst expectations and said it was boosted by a 9.5% boost in sales in North America in the three months to June 30, sending shares surging in London on the good news. 

Shares closed 7.88% higher at 4,671p ($59.58).

The boost helped it overtake drugmaker AstraZeneca

to lead the FTSE 100 index of the U.K.’s largest listed companies.

Read: Unilever profit climbs in first half

“Lockdowns in our markets and reduced personal care occasions amidst restricted living, led to lower demand for skin care, deodorants and hair care, which each saw volume and price decline,” it said on Thursday. 

“Magnum and Ben and Jerry’s continued to grow strongly,” it added. 

Another factor driving sales was heightened focus on good hygiene, which Unilever said drove increased demand for its hand and home hygiene products, each growing double digits in period.

It said that group wide sales for the three months ending June 30 were just 0.3% lower than a year earlier, beating analyst forecasts of a 4.3% drop. 

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ASML sticks to 2020 outlook as net profit rises

An employee walks past an ASML logo, a Dutch company which is currently the largest supplier in the world of semiconductor manufacturing machines via photolithography systems in Veldhoven on April 17, 2018.
They call it “the shrink” — it’s the challenge of how to pack more information onto the microchips which power everything from our phones to our computers, even our coffee machines. And pushing today’s boundaries of science and technology is the Dutch company ASML, which since its foundation in 1984 has quietly become a world leader in the semiconductor business.

emmanuel dunand/Agence France-Presse/Getty Images

ASML Holding NV said Wednesday that net profit for the second quarter rose sharply, driven by higher sales, and that its growth outlook for 2020 remains unchanged relative to the start of the year despite the coronavirus pandemic.

The Dutch maker of semiconductor equipment


made a quarterly net profit of 751 million euros ($856.2 million) compared with EUR476 million for the year-earlier period.

Net sales for the second quarter rose to EUR3.33 billion from EUR2.57 billion a year before, ASML said. The company had previously said revenue it wasn’t able to recognize in the first quarter would shift to the second and third quarters.

ASML shipped nine extreme ultraviolet lithography, or EUV, systems–its most advanced technology–in the quarter. The company said its operational capabilities are now largely back to normal.

The company, which hadn’t provided guidance for the second quarter in light of uncertainty caused by the pandemic, said it expects sales for the third quarter to be between EUR3.6 billion and EUR3.8 billion, with a gross margin of between 47% and 48%. In the second quarter, ASML’s gross margin was 48.2%.

“Our 2020 growth expectations are largely unchanged relative to our view at the start of the year,” ASML President and Chief Executive Peter Wennink said.

ASML said it has agreed to acquire Berliner Glas, a privately held manufacturer of ceramic and optical modules. Financial details of the deal won’t be disclosed, it said.

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