Good Week for Gilead’s Hepatitis-C Treatments, UBS Says

UBS strategist Matthew Roden and team note that it was another good week Gilead Sciences’ (GILD) hepatitis-C treatments:

AP

Scripts for Gilead’s Harvoni during the week ending November 14 were released today with total scripts of 3,606, up +37% w/w. These data are strong in the context of feedback at AASLD that Harvoni Rx are being denied. This implies a total franchise new Rx (i.e. Sovaldi + Harvoni) of 7,424, up 13.4% w/w. For comparison, in its third full week (week ending Jan. 10th), Sovaldi scripts totalled 1,764, and mid-January scripts were 2,500-2,900. Current Bloomberg consensus for 4Q Harvoni sales is $1.8bn…

Scripts for Sovaldi totalled 3,818, down -2% from last week. New Rx were 1,079, down -3% w/w. As expected, the trend continues to reflect a shift to Harvoni for new patient starts following the launch on Oct 13. A total of 28,231 scripts and 9,090 new scripts have been recorded in 4Q. We are tracking to $1.04bn for 4Q Sovaldi sales based on script data (current Bloomberg consensus for 4Q WW sales is $3.2bn, post-earnings FOA consensus for US sales is $1.5bn, and we model $3.1bn HCV sales in the US). We assume 95% complete therapy (97.5% refill in months 2 and 3 each), a 12% gross-to-net pricing (more conservative than Gilead comments imply), a correction factor suggested by scripts vs. reported sales, and 10% of NRx are actually refills.

RBC’s Michael Yee thinks Gilead’s on track to meet Harvoni sales estimates:

Harvoni’s week 5 NRx is tracking in line with our estimates in our Harvoni-APP and towards Q4 consensus of $3B USA. Note, the NRx this week, even though in line with our projection, may have been impacted by the AASLD Liver meeting that ended last Tues as many prescribers (hepatologists, gastroenterologists) were away at the conference.

We believe total Harvoni+Sovaldi franchise TRx needs to maintain current momentum towards Q2:14 totals to reach Q4:14 WW cons of ~$3.7B and 2015E US consensus of $12B.

We are looking for combined TRx to rise towards 8000+ through Thanksgiving and further towards 9000+ TRx in December in order to get to a comfortable run-rate during Q1:15.

Shares of Gilead Sciences have ticked up 0.2% to $100.76 at 1:05 p.m. today.

How to Improve TDFs and Regain Market Share: Hearts & Wallets

Investment product manufacturers could regain some of the market share they lost to other distribution channels by offering product innovations that appeal to more sophisticated investors, according to a report by Hearts & Wallets.

For example, the report noted that in the last 15 years, consumers have accessed target-date funds through their retirement plans or broker-dealers instead of going straight to the provider. Manufacturers could offer improved products by de-emphasizing the date in target-date funds, Hearts & Wallets said.

The firm found a “sizable share of the population” doesn’t have a retirement date in mind either because they don’t feel comfortable with the variables that could affect their retirement savings like the increasing health care costs, inflation and longevity, or simply because they like working.

“Many investors, aside from pensioners, have no idea at what age they’ll stop working altogether, if ever,” Chris Brown, Hearts & Wallets principal, said in a statement. “They are very clear about wanting control of their work/life balance as they grow older.”

The problem for product providers is that target-date funds are “not nearly as attractive outside of a qualified plan as they are inside one,” Brown said. “In the future, compelling product innovation will feature different approaches to asset allocation, as well as addressing the ways in which people actually take income once they have stopped full-time work. Determining how to do this is the area of product development that is most exciting and potentially highly differentiating.”

One way providers could enhance TDFs to make them more appealing to more sophisticated consumers, according to Hearts & Wallets, is to base on the investor’s needs instead of age. “Many investors prefer to customize risk exposure instead of having a product that automatically reduces market exposure,” according to the report.

Simplifying the transition from accumulation to distribution is another differentiator, Hearts & Wallets found.

“Consumers will pay more for added value, such as making the transition from accumulation to income easier,” Laura Varas, Hearts & Wallets LLC principal, said in a statement. “Our research shows that by adding value to investment products manufacturers can improve sales and charge a premium for products that meet a need. That is critical given today’s intense focus on fund expenses.”

The report concluded that providers must also be able to offer multiple products, as respondents aren’t considering single income solution products. “Even if the right product is created,” according to the report, “it’s likely to only attract a portion of one's portfolio. Few […] are interested in putting all of their eggs in one basket.”

Hearts & Wallets surveyed people ages 40 to 64 in March, excluding respondents who were within five years of retirement. Respondents had at least $250,000 in investable assets and were employed full-time.

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Check out $640 Billion in 401(k) Assets Ripe for a Rollover: Judy Diamond on ThinkAdvisor.

Wholesale Inventories Rise Modestly in September

Daniel Acker/Bloomberg via Getty Images WASHINGTON -- U.S. wholesale inventories rose more that expected in September but the government revised downward its initial estimates for growth in stocks during August, which suggests little impact on current views of economic growth in the third quarter. The Commerce Department said Wednesday wholesale inventories increased 0.3 percent during the month after a 0.6 percent gain in August. Economists polled by Reuters had expected a 0.2 percent increase in September. Inventories are a key component of gross domestic product changes. The component that goes into the calculation of GDP -- wholesale stocks excluding autos -- increased 0.1 percent. Sales at wholesalers rose 0.2 percent in September, more than the 0.1 percent increase predicted by economists. At September's sales pace it would take 1.19 months to clear shelves, unchanged from August. Sales had fallen 0.8 percent in August. A slowdown in the pace of restocking by businesses held back stronger economic growth in the third quarter, though gross domestic product still expanded a robust 3.5 percent during the three-month period.

Gas Prices Fall to Lowest Level in Nearly 4 Years

Daniel Acker/Bloomberg via Getty Images NEW YORK -- The average price of a gallon of gasoline in the United States dropped 13 cents in the past two weeks to its cheapest in nearly four years, according to the latest Lundberg survey released Sunday. Gasoline prices fell to $2.94 a gallon of regular grade gasoline, its lowest level since December 2010, according to the survey conducted on Nov. 7. The decline in price is largely driven by lower crude oil prices, which declined further during the period, said Trilby Lundberg, publisher of the survey. "Crude oil dominates what gasoline prices are and what gasoline prices will do," Lundberg said, noting that the direction of crude oil prices in the coming weeks and months will dictate whether gasoline prices will continue to fall further or begin trending upward. "If they don't decline further, then this will be the end or nearly the end of this very steep price drop," she said. The gasoline price is down about 28 cents from a year ago, and has dropped 78 cents from a 2014 peak of $3.72 in May. The highest price within the survey area was recorded in San Francisco at $3.27 a gallon, with the lowest in Memphis at $2.65.

Whole Foods Market Looks to Turn Itself Around

Source: ChadPerez49 via Wikimedia Commons.

Every once in a while, a company truly revolutionizes what seems like a fully mature industry. In the grocery-store arena, Whole Foods Market (NASDAQ: WFM  ) has played that role flawlessly, taking what used to be viewed as a low-margin commodity business and turning it on its head by taking advantage of changing customer preferences. By tapping into the healthy food movement, Whole Foods has produced huge growth over the years. Now, as the company has hit a brief air pocket, investors hope that Whole Foods will get back to business when it reports its fiscal fourth-quarter results on Wednesday.

Whole Foods needs no introduction to most Americans, with its emphasis on organics and natural foods having earned praise from many shoppers even as its higher prices have led some to give it its Whole Paycheck moniker. But the real question facing the company right now is whether Whole Foods can maintain its competitive edge even as traditional grocers like Kroger (NYSE: KR  ) and copycat premium grocers like The Fresh Market (NASDAQ: TFM  ) try to box it in. Let's take an early look at what's been happening with Whole Foods over the past quarter and what we're likely to see in its report.

Stats on Whole Foods Market

Analyst EPS Estimate	$0.32
Change From Year-Ago EPS	0%
Revenue Estimate	$3.26 billion
Change From Year-Ago Revenue	9.4%
Earnings Beats in Past 4 Quarters	2

Source: Yahoo! Finance.

What's next for Whole Foods earnings?
Over the past few months, investors have held their views on Whole Foods earnings stable, with their projections for the just-ended quarter remaining unchanged. The stock has finally picked itself up off the mat, climbing about 3% since late July.

Whole Foods has been struggling ever since its fiscal second-quarter results back in May, in which it reduced its projections for revenue growth from a range of 11% to 12% to a lower range of 10.5% to 11% and made even more draconian reductions to earnings-growth guidance. With Whole Foods having slashed its expected earnings growth to a range of just 3% to 6%, growth investors worry that the best times for the premium grocer were behind it. In its fiscal third quarter, Whole Foods saw sales climb 10% to a record $3.4 billion, but comps were up just 3.9%, and the company once again cut its guidance for sales and earnings growth for the full 2014 fiscal year.

Source: David Shankbone/ Wikimedia Commons.

Yet Whole Foods still has confidence in its long-term prospects. Even though it already has a commanding lead over The Fresh Market and its other premium peers, Whole Foods is looking to accelerate its store-count growth in future years. That should help it compete better against Kroger and other large-scale grocery chains to answer the moves they've made to emphasize organics and natural foods in their own offerings. Whole Foods is also renovating some of its older locations to keep up with its peers. At the same time, it's also looking for ways to cut costs for its customers while still maintaining its high margins. The increased emphasis on its store brands has been one method Whole Foods has used to capture more wallet-share from shoppers.

Still, the thing that has disappointed Whole Foods investors is the decline in same-store sales, and that's a trend that might not reverse itself anytime soon. What Whole Foods appears to be doing instead is trying to make more from less, acknowledging the inevitability of slowing revenue growth but looking to ensure as much of those sales as possible reach the bottom line. That strategy could succeed in the short run, but eventually, Whole Foods will have to beat its competitors on the sales front as well.

In the Whole Foods earnings report, same-store sales will definitely be a point of emphasis for investors. But you should also take a look at the company's comments on its long-term strategic plans, because in the ever-changing grocery-industry environment, what Whole Foods focuses on has ramifications for the entire market. Whatever Whole Foods says, you can be sure that Kroger, Fresh Market, and other players will listen closely and come up with their answers to Whole Foods' strategy as quickly as they can.

This $19 trillion industry could destroy the Internet
Another big trend in technology has emphasized the value of the online experience, but one bleeding-edge technology is about to put the World Wide Web to bed. It could make early investors wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism. The Economist is calling it "transformative." But you'll probably just call it "how I made my millions." Don't be too late to the party -- click here for one stock to own when the Web goes dark.