Apple Inc, Gilead and Alphabet Inc: Can Analysts Predict Two Years Into The Future?

Was Brian Skorney Right about Gilead Sciences, Inc.(NASDAQ:GILD)

Back in 2014, Express Scripts Holding Company (NASDAQ:ESRX), the largest pharmacy benefit manager in the US announced that it will no longer cover Gilead Sciences, Inc. (NASDAQ:GILD)’s hepatitis C drug Harvoni, and prefer a more cheaper drug made by AbbVie Inc (NYSE:ABBV) called ‘Viekira’. Discussing this announcement in a program on CNBC, Baird’s senior biotechnology research analyst Brian Skorney had advised investors to assume a “wait and see” mode as he thought the news would not dent the market share for Gilead Sciences, Inc. (NASDAQ:GILD).

Selling GILD shares would have been better than waiting and holding the bag over the long-term. At the time of the interview, Gilead’s stock was trading at $96, and today its price is $73. Earlier this year, Merck & Co., Inc. (NYSE:MRK) launched its Hepatitis C drug which is 32% cheaper than that of Gilead. Last week, a US jury ordered Gilead Sciences, Inc. (NASDAQ:GILD) to pay Merck (MERCK.CO-INC) $2.54 billion in royalties in a patent lawsuit case regarding drugs hepatitis Sovaldi and Harvoni. The jury said that a patent acquired by Merck in 2014 on hepatitis C treatments was valid. Gilead’s hepatitis C drugs have proved a 90% success rate in curing the disease, but the company has been under fire for hiking the price of its drug. Gilead is reported to have made $20 billion with Sovaldi and Harvoni drugs in 2015.

However, if we take into account only short-term future and context of the interview, Brian Skorneythe was dead right, as the stock skyrocketed to as much as 121.89 in 2015, before starting to slip in 2016.

Eric Jackson’s Prediction about Google’s Mobile Ads 

Eric Jackson, founder and managing partner of Ironfire Capital, had predicted that Alphabet Inc (NASDAQ:GOOGL) was set to face difficulties in mobile ads business, as the hedge fund manager thought the company was not ready for a smooth transition from the conventional model to the mobile-first paradigm. Jackson had liked Facebook’s handling of the mobile ads. Google, however, remains the leader in the mobile ads industry.

In 2015, the company took away a whopping 64% of the total revenue from the overall online ads sector ($30 billion), while Facebook’s share was just $8 billion, according to Pivotal Research analyst Brian Wieser. In an earnings call in April, Google’s CEO Sunder Pichai said that Google was ready to revamp its mobile ads business around video, targeted ads based on user data and app install ads. Alphabet Inc (NASDAQ:GOOGL) recently said its faster mobile ads are boosting click-through rates by 200%. In the second quarter of 2016, Google’s total revenue totaled to $21.5 billion, out of which nearly $19.1 billion came from online ads business. By 2018, about 60% of Alphabet Inc (NASDAQ:GOOGL)’s ads revenue will come from mobile ads, according to eMarketer.

 

Disclosure: None