The big pharmaceutical stocks are one area that has done somewhat better this year. One major reason for that is the shrill rhetoric from politicians has quieted as the election cycle is on hold for now, until the midterm elections. In addition, the major large cap companies have posted some decent earnings numbers, and when you add in the safety net of sizable and dependable dividends, their stocks look attractive.
A new Deutsche Bank research report focuses on the big capitalization pharmaceutical stocks and the upcoming catalysts and news flow they have for the rest of 2017.
This is one of the top pharmaceutical stocks picks across Wall Street. AbbVie Inc. (NYSE: ABBV) is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories. The company develops and markets drugs in areas such as immunology, virology, renal disease, dyslipidemia and neuroscience.
One of the biggest concerns with AbbVie is what eventually might happen with anti-inflammatory therapy Humira, which has some of the largest sales for a drug ever recorded. Last year, the patent board instituted Coherus BioSciences’ Inter Partes Review against the Humira ‘135 patent. The problem with Humira is that biosimilars and generics are itching to enter the market.
Deutsche Bank expects the company to release ABT-494 Phase 3 readouts for rheumatoid arthritis. In addition, Risankizumab Phase 3 readouts for psoriasis are also expected this year.
Shareholders receive a 3.88% dividend. The Wall Street consensus price target for the shares is $72.28. Shares closed Wednesday at $65.93.
This top company also remains a favorite on Wall Street. Bristol-Myers Squibb Co. (NYSE: BMY) is a global pharmaceutical company focused on discovering, developing, licensing and marketing chemically synthesized drugs or small molecules and biologics in various therapeutic areas, including virology comprising human immunodeficiency virus infection (HIV), oncology, neuroscience, immunoscience and cardiovascular.
The company recently announced that Biogen will pay $300 million upfront to Bristol-Myers to license a palsy drug with a $2 billion market opportunity and the potential to use that to treat Alzheimer’s. The company will pay a total of $410 million in milestone payments and a tiered double-digit royalty to license a drug known only as BMS-986168. The drug just completed Phase 1 testing in progressive supranuclear palsy.
Deutsche Bank cites a presentation at the American Society of Clinical Oncology (ASCO) conference in early June with Phase 1 and 2 data for Opdivo and Incyte’s IDO1 inhibitor for advanced solid tumors. They also cite Opdivo Phase 3 readouts for 1L Melanoma that are coming as well.
Shareholders receive a 2.9% dividend. The consensus price objective is $57.18, and shares closed Wednesday at $53.82.
This stock also has substantial upside potential. Eli Lilly and Co. (NYSE: LLY) is a global health care company with numerous core products in a number of primary-care pharmaceutical markets. The company generates revenues from its pharmaceutical product and animal health segments.
The product portfolio includes Zyprexa (for schizophrenia and bipolar disorder), Gemzar (pancreatic cancer), Evista (osteoporosis), Cymbalta (depression), Cialis (erectile dysfunction), Strattera (attention deficit hyperactivity disorder), Erbitux (cancer) and Alimta (chemotherapy). Eli Lilly also has a strong presence in the diabetes market.
Deutsche Bank cites Abemaciclib Phase 3 data for 2L breast cancer (MONARCH 2) and an investor webcast at ASCO. The firm also expects Eli Lilly to present Phase 3 readouts for galcanezumab for migraine prevention and Lasmiditan for acute migraines, both in the second half of 2017.
Shareholders receive a 2.67% dividend. The consensus price objective of $89.10 compares with Wednesday’s close at $77.96.
This remains a leading health care stock for conservative investors.
Merck & Co. Inc. (NYSE: MRK) offers therapeutic and preventive agents to treat cardiovascular issues, type 2 diabetes, asthma, nasal allergy symptoms, allergic rhinitis, chronic hepatitis C virus, HIV-1 infection, fungal infections, intra-abdominal infections, hypertension, arthritis and pain, inflammatory, osteoporosis, male pattern hair loss and fertility diseases.
The company also provides neuromuscular blocking agents for use in surgery, anti-bacterial products for skin and skin structure infections, cholesterol modifying medicines, non-sedating antihistamine and vaginal contraceptive products.
Deutsche Bank points to the investor event at ASCO on June 5 and various presentations, including additional follow-up data from KEYNOTE-021G, and Phase 1 and 2 data for Keytruda plus Incyte’s IDO1 inhibitor for advanced solid tumors. In addition, they point to Keytruda Phase 3 readouts for 1L non-small cell lung cancer (KEYNOTE-189) as well as several other indications, all coming in the second half of 2017.
Merck shareholders receive a 2.9% dividend. The consensus price target is $69.30. Shares closed at $64.93.
This top pharmaceutical stock made a gigantic splash last year with a $5.5 billion purchase of Anacor Pharmaceuticals. Pfizer Inc. (NYSE: PFE) has a very strong pipeline, and being the world’s largest drug manufacturer by sales value supports the Wall Street notion that the company can generate higher long-term revenues through the accelerated growth of its new drugs over the next five years.
Deutsche Bank points to Avelumab Phase 3 readouts for 3L gastric cancer, which should still come in the first half of 2017, and 2L non-small cell lung cancer later this year. The firm also expects FDA action on Xeljanz and Xeljanz XR for psoriatic arthritis and ertugliflozin and combinations for type 2 diabetes, all of which could come in December.
Investors receive a 3.98% dividend. The consensus price objective is $37.53. Shares closed Wednesday at $32.05.
These top companies all have data that could move their shares coming in 2017. They make good sense for more conservative buy-and-hold strategies looking for total return. All have been around for years and should remain sector leaders for years to come.