Biotech Stock Earnings Preview

After a downward start to the year, biotech stocks have begun to kick it back into gear, just in time for first-quarter earnings season.

In particular, stocks of profitable, larger biotech companies outperformed development-stage biotechs and the broader indices during the first quarter, according to the Cowen biotech research team. "Our analysis suggests that in addition to holding up better during the sector or market downturns, large-cap biotechs are also first to recover as market conditions improve," they wrote in a Monday report, suggesting we keep our eye on the favorable impact of aggressive price hikes and also foreign-exchange rates as earnings season gets underway.

Here are the sales targets and earnings estimates to keep an eye on for the biotechs Genentech DNA, Genzyme GENZ, Biogen Idec BIIB, Amgen AMGN and Celgene CELG as we get ready for Genentech to kick things off Thursday.

Genentech: April 10

Biotech giant Genetech, with arguably the biggest biotech milestone of the first quarter, won U.S. regulatory approval for Avastin as a breast cancer treatment in February, despite a panel's vote for a negative recommendation last December.

Wall Street is looking for Genentech to earn 82 cents a share on $3.1 billion in revenue for the quarter, including an expected $624 million in U.S. sales of the cancer drug Avastin. Merrill Lynch's Eric Ende and Lazard's Joel Sendek are among those expecting a per-share beat. Sendek expects 85 cents a share.

However, on the basis of recent sales data, Ende expects U.S. Avastin sales of $615 million (below the abovementioned consensus). Ende expects that safety concerns before the Food and Drug Administration approval may have hurt sales early in the quarter -- although he expects that the trend reversed with the agency's ultimate decision.

Wall Street is looking for $329 million in Herceptin sales, $202 million in Lucentis sales and $603 million from Rituxan in the U.S. Ende expects Herceptin sales will come in above the consensus estimate but says Lucentis and Rituxan sales will fall shy.

Analysts surveyed by Thomson Financial are expecting earnings of $3.43 a share on revenue of $13.05 billion for the year.

Gilead: April 16

Gilead may well continue to impress investors with its first-quarter HIV drug sales, according to some analysts who say the franchise is tracking above consensus targets. On average, the Street is looking for first-quarter earnings of 48 cents a share on revenue of $1.2 billion, according to Thomson First Call.

Breaking down HIV drug sales, the consensus targets are $147 million for Viread, $455 million for Truvada and $309 million for Atripla. However, Merrill Lynch's Ende wrote in a note on Monday that, according to data he's seen, HIV drug sales should be higher than consensus estimates.

The Street is looking for $919 million total in HIV sales, as well as $79 million from Hepsera, $67 million in sales of antifungal AmBisome and $25 million from the hypertension drug Letairis.

Merrill Lynch's Ende expects the Letairis numbers to be telling because the figures represent the second quarter since the drug's approval that Letairis was sold without large numbers of patients receiving the drug for free.

Punk Ziegel's Sharon Seiler raised her estimate for Gilead's HIV full-year 2008 product sales to more than $4 billion from $3.97 billion previously, excluding the Sustiva component of Atripla. Seiler reined in her total sales estimate to about $4.83 billion from $4.93 billion, but her estimate still exceeds Gilead's guidance.

Analysts surveyed by Thomson Financial are looking for full-year 2008 earnings of $1.89 a share on revenue of roughly $5.05 billion.