Bernstein: Gilead’s HIV business drives an earnings beat as 2028 pricing pressure is quantified

Where was the third quarter strong, and which gains arrived early?

Gilead reported third-quarter 2026 revenue of 8.3 billion dollars, 6% above market consensus, and earnings per share of 2.55 dollars, 15% above consensus. Base business sales excluding the COVID medicine Veklury rose 16% year over year to 8.2 billion dollars, the strongest growth rate in more than a decade.
The company raised its 2026 product sales guidance excluding Veklury by 900 million dollars to 30.7 billion–31 billion dollars. However, HIV inventory stocking was above normal in the third quarter, and the company expects below-normal stocking in the fourth quarter, equivalent to some seasonal gains arriving early.
Alongside the higher revenue guidance, the company raised its full-year forecast for acquired in-process R&D expenses to approximately 12.9 billion dollars, including approximately 1.4 billion dollars in upfront payments expected in the fourth quarter; non-GAAP earnings-per-share guidance was lowered to a loss of 1.20–0.85 dollars.

Third-quarter HIV sales rose 18% year over year to 6.25 billion dollars. Biktarvy sales grew 10% to 4.06 billion dollars, and its share of the US treatment market rose to 53%; share gains, realized prices and favorable inventory together drove growth. The treatment market has yet to return to its historical growth rate of 2%–3%.
In prevention, Yeztugo and Descovy together accounted for approximately 50% of the US HIV pre-exposure prophylaxis market, with annualized sales of approximately 4 billion dollars at the current sales pace. Prevention sales nearly doubled year over year, while the underlying market grew approximately 14% over the same period.
Yeztugo generated third-quarter revenue of 305 million dollars, up 31% quarter over quarter. Most new users still switched from other regimens, but the proportion of patients who had not previously used prevention medication increased; the company expects the holiday season to slow sequential growth in the fourth quarter and maintained its full-year guidance of approximately 1 billion dollars.
The company plans to launch a once-weekly oral prevention regimen in the first quarter of 2027 for people who want a long-acting medicine but do not want injections, using Yeztugo’s established channel coverage to accelerate adoption.

The US Medicare agency set Biktarvy’s maximum fair price at approximately 2600 dollars per 30-day course, a discount of approximately 38% to its Medicare list price, effective January 2028. Gilead expects its 2028 Biktarvy revenue to decrease by a net approximately 1.5 billion dollars from 2027.
The estimate covers Medicare and spillover effects on Medicaid, 340B and other US channels, and accounts for the Part D reform impact that will disappear in 2028. Nevertheless, management still expects total HIV revenue, total company product sales and earnings per share to grow in 2028 from 2027.
Early use of Bixlenvo, launched at the end of August, has been stronger than that of recent competing products at the same stage after launch. As coverage and awareness expand, the company hopes to move beyond patients on complex treatment regimens to a broader population of virally suppressed patients switching therapies, partly cushioning the pressure on Biktarvy; management has not quantified its contribution.

Third-quarter cell therapy sales were 355 million dollars, down 18% year over year. The regulatory decision date for anito-cel is 23 December; if approved, treatment-center activation, formulary inclusion and payment arrangements could still mean patients wait several more months for treatment.
The inflammation pipeline is expanding: the company plans to advance oral candidate emvistegrast into a phase three ulcerative colitis trial in 2027; the newly acquired oral IL-23R program can be explored as monotherapy or in combination, though formulation and dosing requirements for combinations remain under study.
Third-quarter sales of oncology drug Trodelvy rose 42% year over year to 506 million dollars, but competing drugs are moving into earlier lines of treatment, potentially increasing future competition.

Bernstein raised its 2026 revenue forecast by 621 million dollars to 31.57 billion dollars, while lowering its non-GAAP earnings-per-share forecast from a loss of 0.33 dollars to a loss of 0.73 dollars, incorporating higher acquired in-process R&D expenses.
The firm maintained its outperform rating and raised its price target from 160 dollars to 175 dollars, citing a more diversified R&D pipeline and a clearer quantification of the Biktarvy price reduction’s impact. The new target implies a 2027 forecast price-to-earnings ratio of 17.3 times, above the long-term median of 11.4 times.