Gilead Sciences, Inc. (NASDAQ:GILD) and Thermo Fisher Scientific Inc. (NYSE:TMO) are benefiting from two very different sources of growth. Gilead’s momentum is being driven primarily by its HIV portfolio, where established medicines and newer products are expanding rapidly. Thermo Fisher, meanwhile, is beginning to benefit from strengthening customer activity across the life-sciences markets it serves after a period of uneven demand.
DON’T MISS: Can Eli Lilly Catch Novo Nordisk in the Oral GLP-1 Race?
The latest results show meaningful improvement at both companies, but the durability and breadth of that growth look quite different. Let’s take a deeper look at which company has the stronger growth outlook for investors.
Bull Case
Gilead currently has the faster underlying growth profile. The company reported that second-quarter product sales excluding Veklury increased 10% to $7.6 billion, while HIV sales grew 12% to $5.7 billion. Biktarvy remained its largest product, with sales increasing 7% to $3.8 billion. Descovy revenue jumped 48% to $967 million, while Yeztugo, Gilead’s twice-yearly injectable HIV prevention medicine, generated $232 million compared with $15 million a year earlier.
There was also growth outside HIV, as the company saw liver-disease sales increase 10% to $877 million, while Livdelzi revenue rose from $78 million to $167 million. Trodelvy sales increased 26% to $457 million. That performance prompted Gilead to raise its 2026 outlook, and management now expects product sales of $30.1 billion-$30.4 billion and product sales excluding Veklury of $29.8 billion-$30.1 billion.
Thermo Fisher’s (NYSE:TMO) growth story, on the other hand, is less concentrated and increasingly tied to strengthening customer activity across its end markets. It reported that fiscal Q2 revenue increased 10% to $11.99 billion, including 5% organic growth. Adjusted EPS rose 13% to $6.03, while adjusted operating margin expanded to 22.8% from 21.9% a year earlier.
READ ALSO: Can Oral Wegovy Help Novo Nordisk Capture China’s $4.46 Billion GLP-1 Opportunity?
Life Sciences Solutions revenue increased 13% on a reported basis to $2.82 billion, while organic revenue grew 3%. Management highlighted continued strength in bioproduction as one of the drivers of the business. Analytical Instruments also returned to growth, with the company reporting that segment revenue increased to $1.85 billion from $1.73 billion a year earlier, while segment income climbed to $424 million from $325 million.
More broadly, CEO Marc Casper said customer activity across Thermo Fisher’s end markets continued to strengthen. Reuters also reported that improving demand was visible across all of the company’s business segments, with increased biotech customer activity beginning to contribute to revenue. That improvement led Thermo Fisher to raise its full-year adjusted EPS outlook to $24.93-$25.33 from $24.64-$25.12.
Bear Case
Gilead’s (NASDAQ:GILD) stronger growth comes with considerable concentration risk, as its HIV generated $5.69 billion of its $7.63 billion in Q2 product sales. This means that roughly three-quarters of product revenue came from one therapeutic area, and while the franchise is performing strongly, the company remains heavily dependent on that performance continuing.
Its effort to diversify has also required substantial investment. Gilead recorded $11.2 billion of acquired in-process R&D expenses during Q2, primarily associated with its acquisitions of Arcellx, Tubulis, and Ouro Medicines. Those transactions contributed to quarterly GAAP and non-GAAP losses per share of $8.45 and $6.75, respectively. Results outside HIV show that Trodelvy sales increased 26%, but Cell Therapy declined 14% to $417 million amid competitive headwinds. Yescarta revenue fell 12%, while Tecartus declined 24%, showing that the trends are not uniformly strong either.
READ ALSO: Could Mounjaro’s New Heart Benefit Unlock the Next Growth Phase for Lilly?
In contrast, Thermo Fisher faces almost the opposite risk. Its business is much broader, but its growth depends partly on continued improvement across pharmaceutical, biotech, academic, government and other customer markets. Organic revenue increased 5% in fiscal Q2, which reflects an improvement from 1% in the first quarter. Reuters reported that biotech customer activity was beginning to contribute positively to revenue and that the academic and government market had returned to growth, although management said that market was still stabilizing.
China also returned to growth, but Thermo Fisher’s CFO said demand from academic and government customers there remained subdued. That leaves Thermo Fisher dependent on the emerging recovery becoming durable, and if customer activity weakens again, particularly among biotech or research customers, the recent acceleration in organic growth could prove harder to sustain.
Conclusion
Gilead currently has the stronger growth numbers, with its base business growing 10%. HIV also increased 12%, several important products posted double-digit growth, and management raised its full-year sales outlook. Thermo Fisher’s (NYSE:TMO) growth is more moderate, but its fiscal Q2 results provide evidence that conditions across its end markets are improving. Organic growth accelerated to 5%, adjusted EPS increased 13%, margins expanded, and management raised its earnings outlook.
The trade-off is that Gilead offers faster current growth, but roughly three-quarters of its product sales still come from HIV. Thermo Fisher offers a broader growth base, but part of its outlook depends on continued recovery in customer spending across life-sciences markets. On current operating evidence, Gilead has the stronger near-term growth trajectory, but Thermo Fisher’s case becomes more compelling if the improvement seen in fiscal Q2 develops into a sustained, broad-based recovery across its end markets.
READ NEXT: Can Eli Lilly Catch Novo Nordisk in the Oral GLP-1 Race? AND Abbott vs. Intuitive Surgical: Is Consistent Growth Better Than Premium Growth?
This article is originally published at Insider Monkey.
Hedge Fund Resource Center