Apple Inc. (NASDAQ:AAPL), Alibaba Group Holding Ltd (ADR) (NYSE:BABA), and Gilead Sciences, Inc. (NASDAQ:GILD) are popular stocks to watch as we kick off 2016. With iPhone demand, NDAs, and the rise of mobile eCommerce, analysts have plenty to look forward to this year.
Going into 2016, analysts are mostly bullish on the technology giant. Despite recent weak demand for iPhone, specifically from its component suppliers, Ananda Baruah of Brean Capital reassured investors that “supply chain ‘noise’” is not what it seems. The analyst remains bullish on the company and believes that Street estimates through 2017 do not accurately account for gross profit margin, which has the potential to surpass expectations.
Although other analysts predict slowing growth for the iPhone this year, Baruah believes that overall, the company will sell around 250 million units, marking 7-10% growth from last year’s numbers. The analyst states that despite the Street’s “unreasonably strong expectations coming into the Dec Q” of 76- 85 million iPhones, he believes the company’s iPhone numbers will be in the 76-78 million range for the December quarter. Specifically, he believes the company will build 70-75 million units and ship the remaining few million from inventory. The analyst also expressed bullishness regarding the rumored 4 inch iPhone model to be introduced around March/April. He stated, “Ultimately, we believe this could provide AAPL the ability to ship ~250M iPhone units for CY16, or 5% – 10% unit growth, vs. what we believe is an Increasing Street view of iPhone unit shipment declines of 3% – 5%.”
According to TipRanks’ statistics, out of the 31 analysts who have rated AAPL in the past 3 months, 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 39% upside from where shares last closed.
Gilead Sciences, Inc.
Gilead fans have a lot to look forward to in 2016. Last month, the company entered a deal with Galapagos NV (ADR) (NASDAQ:GLPG), a Belgian pharmaceutical company, to jointly develop and promote the JAK1-selective inhibitor filgotinib for inflammatory disease indications. Following this announcement, analyst Brian Skorney of Robert W. Baird weighed in on the company, reiterating an Outpeform rating and a $135 price target on December 18, 2015. He states that “the payoff [from the deal] could be sizeable, enough to move the needle for even Gilead.”
Another major announcement from the past few months includes positive Phase 3 data from Sofosubuvir/Valaptisir, for the treatment of 6 types of HCV infection, shortly after the company submitted an NDA for the drug. If approved, it would be the first combination single tablet of its kind to treat chronic HCV infection. On November 18, 2015, analyst Alan Carr of Needham reiterated a Buy rating on the company with a $125 price target following the Phase 3 results, stating, “Based on available data, Gilead appears likely to retain its strong position in HCV.” Other recent news from the company includes November’s FDA approval of Genvoya to treat HIV-1 and indication approvals of Harvoni for the treatment of additional types of Hepatitis C.
According to TipRanks’ statistics, out of the 11 analysts who have rated GILD in the past 3 months, 9 gave a Buy rating while 2 remain on the sidelines. The average 12-month price target for the stock is $129, marking a 27% upside from where shares last closed .
Alibaba Group Holding Ltd (ADR)
Alibaba is starting off the year on a positive note as well. On December 14, 2015, analyst Mark Mahaney of RBC Capital reiterated his Overweight rating on Alibaba with a price target of $195, citing positive survey results from 1,500+ Chinese online consumers. The survey pointed to a “robust China Online retail market and a strong position for Alibaba” and highlighted several advantages and opportunities for the company going forward. After the survey, Mahaney believes that “Alibaba’s China online retail segment is at a monetization inflection point” due to “increased mobile usage,” an improvement in advertisers and suppliers, and “ad product innovation.” According to the analyst, if this mobile monetization continues, shares and estimates will only increase in 2016.
Back in November, the company experienced a record Singles Day sales event, earning $14.3 billion in GMV (gross merchandise volume). Analyst Carlos Kirjner of Bernstein, who on November 12, 2015 reiterated an Outperform rating on BABA with a $100 price target, stated that 68.7% of this GMV came from mobile sales, and that based on the overall success of Singles Day, y/y GMV growth estimates are “conservative” for 2016, with the actual numbers likely surpassing his estimates. On November 12, 2015, Scott Devitt of Stifel reiterated a Buy rating on the company with a $94 price target, stating that the results played an “increasingly important role” for Chinese e-commerce. The analyst believes that the sharp increase in mobile sales provides BABA with a monetization opportunity through new ads and apps. Furthermore, the analyst notes that these record numbers mark the company’s progress into “the global digital content and eCommerce ecosystem.”
According to TipRanks’ statistics, out of the 21 analysts who have rated BABA in the past 3 months, 19 gave a Buy rating while 2 remain on the sidelines. The average 12-month price target for the stock is $95.78, marking an 18% upside from where shares last closed.