Stock Picks: Apple, Lilly, Barrick Gold

Wall Street analyst opinions on selected stocks in the news Wednesday

Apple Inc. (AAPL)

Kaufman Bros. reiterates buy

Kaufman Bros. analyst Shaw Wu said in a Dec. 2 note that while he believes an iPhone deal with Verizon Wireless (VZ) would be ideal in giving Apple access to the two largest wireless subscriber bases in the U.S. (Verizon's 89 million and AT&T's 82 million), he believes such a deal "may take longer and the situation is more complicated than consensus thinking."

Moreover, Wu believes there is also a possibility that AT&T's (T) exclusive iPhone contract (that he believes ends in summer 2010), could get extended into 2011.

"While we believe Verizon is likely inevitable [as a partner for Apple] at some point when 4G technology rolls out in 2012 or so, we believe Sprint [S] and/or T-Mobile [DT] are more willing partners for Apple in helping maintain margins and customer control," wrote Wu.

Wu continues to believe that Apple "is positioned to outperform in this tough macroeconomic environment with its defensible strategic and structural advantages and its vertically integrated model". He has a $235 price target on the shares.

Eli Lilly & Co. (LLY)

Standard & Poor's Equity Research reiterates hold; raises price target

S&P equity analyst Herman Saftlas said in a Dec. 2 note that he expects Lilly, at its Dec. 10 analyst day, to focus on key growth drivers such as Cymbalta, the diabetes franchise, patent issues, cost-cutting measures and its pipeline. Saftlas sees Cymbalta benefiting from new indications, while recently launched Effient "is making some traction" in the coronary market.

The analyst said his enthusiasm for Lilly shares is tempered by the patent expiration on Zyprexa in 2011, bleeding issues with Effient, and pipeline uncertainties. He raised his price target by $3 to $40.

Barrick Gold (ABX)

UBS maintains buy; raises valuation target

In a Dec. 2 note, UBS analyst Brian MacArthur said that Barrick had completed the elimination of its gold hedges. He noted that on Oct. 28, the company had 1.9 million ounces of gold hedges remaining and $1.5 billion in floating contracts; as of Dec. 1, it had no gold hedges and $0.7 billion in floating contracts.

With the upward trend in gold over the past few years, MacArthur said he believed that investors have penalized Barrick due to its hedges. "With the elimination of ABX’s gold hedges, we note there is potential for ABX to re-rate more in line with its senior gold peers," he wrote.

MacArthur noted that over the next few years as Barrick develops its next generation mines -- Cortez Hills, Pueblo Viejo and Pascua-Lama -- it should add an estimated 2.5 million of production at lower cash costs. He pointed out that Barrick will also have a large capital budget, especially if it pursues all of the additional projects in its pipeline including Cerro Casale, Reko Diq and Donlin Creek.

The analyst hiked his valuation target from $52 to $54.