Analysts are not wasting a minute in 2016 as they are already eager to weigh in on two of the most popular stocks, Apple Inc. (NASDAQ:AAPL) and Gilead Sciences, Inc. (NASDAQ:GILD). Below, we examine why FBR is not worried about Apple’s decelerating iPhone sales and why Cowen & Co. continues to believe Gilead is undervalued.
As 2016 starts, analyst Daniel Ives of FBR & Co. weighed in on Apple with a positive outlook despite recent concerns. The analyst states that over the past few months, Apple has experienced challenges such as low demand for iPhone 6s and slow Chinese market growth. As a result, many analysts believe Apple’s glory days are long gone and “tougher days are ahead.”
Ives assures that bearishness due to low company guidance is an exaggeration, as Apple is preparing for lackluster March and June quarters in anticipation for the iPhone 7 product cycle, scheduled for September. Although Ives acknowledges lower than expected demand for iPhone 6s, he believes “this near-term product transition period will ultimately lead to brighter days ahead on the shoulders of the flagship iPhone 7 release” later this year, noting the “pent-up consumer demand/mega product cycle” will get the company back on track.
The analyst also states that the company is aware of recent smartphone industry hurdles regarding the macro environment and competition. As a result, Apple is expanding into enterprise, wearables, and virtual reality to offset this challenge. Ives concludes by stating that the company has a “compelling risk/reward” ratio. Ives reiterates his Outperform rating on Apple with no change to his price target.
According to TipRanks’ statistics, 31 analysts have rated AAPL in the last 3 months. Of those 31 analysts, 25 gave a Buy rating while 6 remain on the sidelines. The average 12-month price target for the stock is $145.89, marking a 42% upside from where shares last closed.
Gilead Sciences, Inc.
Phil Nadeau of Cowen & Co. reiterated an Outperform rating on Gilead today with a $130 price target after the company increased the price tag for Letairis for pulmonary arterial hypertension and Ranexa for chronic angina.
The analyst explains, “Third party sources indicate that the prices of both Letairis and Ranexa were increased by 9.9% on 12/30/2015.” The wholesale acquisition cost of a month’s supply of Letairis was increased from $7,368.94 to $8,098.47 while Ranexa’s price tag increased from $453.78 to $498.70 for one month’s supply. Nadeau adds, “The size and timing of these price increases is consistent with Gilead’s historical pattern. Moreover, the magnitude of the increases suggests that our 2016 Letairis and Ranexa estimates should be achievable.”
Nadeau explains that discounts and rebates will inhibit Gilead from recognizing the “full magnitude” of the price increases, but the increases are nonetheless reason for “additional confidence” heading into 2016. Nadeau concludes, “We continue to think that Gilead is undervalued, and remain at Outperform.”
According to TipRanks, 9 analysts are bullish on Gilead while 2 remain on the sidelines. The average 12-month price target between these 11 analysts is $129, marking a 32% potential upside from current levels.