To kick off biotech in 2016, analyst Joshua Schimmer of Piper Jaffray pounds the table on both Gilead Sciences, Inc. (NASDAQ:GILD) and Amgen, Inc. (NASDAQ:AMGN). The analyst is refreshing his thinking for his coverage universe and summarizing what’s in store.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Joshua Schimmer has a yearly average return of -7.7% and a 31.1% success rate. Schimmer is ranked #3566 out of 3630 analysts.
Gilead Sciences, Inc.
Schimmer kicked off 2016 by reiterating an Overweight rating on Gilead with a price target of $134, but the analyst hopes that the company will achieve meaningful growth with a new pipeline therapy.
He explains, “We maintain our PT of $134, but hope that GILD can find a pipeline program that resonates in a way that will lead us to incorporate meaningful growth to our model. Otherwise GILD is relying on earnings beats to drive share price while hoping the multiple remains stable; at current levels it’s hard to imagine it getting any worse.”
Schimmer acknowledges that the Gilead’s HCV and HIV franchises remain robust, even though the long term growth prospects for the HIV franchise remains unclear. He expects Gilead to continue to dominate the HCV market. However, these two franchises are not enough to ensure meaningful long term value, according to the analyst. He explains, “The RSV antiviral is interesting but still doesn’t move the needle enough. Without an emerging pipeline product to drive long-term enthusiasm GILD will continue to trade at a depressed multiple, albeit one with little downside. That said, the company has a growing cash position and a broad array of M&A opportunities, and it just takes one big one (or a few little ones) to create a diversified collection of attractive pipeline programs.”
According to TipRanks, 9 analysts have voiced bullish ratings in the last 3 months while 1 remains neutral. The average 12-month price target between these 10 analysts is $129.22, marking a 31% potential upside from current level.
Schimmer followed up with a rating on Amgen, reiterating an Overweight rating with a $200 price target. The analyst anticipates a big year for Repatha, the company’s new cholesterol lowering medication, and another Enbrel price hike. Despite biosimilar threats in the market, Schimmer believes the company is “well positioned to withstand introduction of competitive threats to its mature product franchises.”
The analyst notes that Repatha CV outcome data will be reported in the second half of this year. He explains, “While success is a broadly consensus view that may limit upside to shares on the data, a positive trial would still seem to position the product for meaningful growth in the coming years. A patent litigation case against a competitor may lead to a settlement in 1H16 depending on the outcome.”
Overall, Schimmer is confident in Amgen’s rapidly evolving pipeline, highlighting the company’s osteoporosis and migraine research as the next big opportunities. The analyst concludes, “Beyond product portfolio, we believe AMGN is able to manage its operating margins, including a potential improvement to COGS in 2018 and beyond, and easily control R&D and SG&A spend.”
According to the 4 analysts polled by TipRanks in the last 3 months, 3 are bullish on Amgen while one remains on the sidelines. The average 12-month price target between these 4 analysts is $182.33, marking a 17% potential upside from current levels.