Jefferies Makes Another Huge Change to Franchise Picks Portfolio

Print Email

Most of the top firms we cover here at 24/7 Wall St. are tweaking their high-conviction stocks lists for 2017, and many are trying to take into account macro changes that could make a difference this year. Those changes could include higher inflation, a stronger dollar and rising interest rates. The analysts also are trying to factor in positives like lower nominal tax rates and less of the ever-burdensome regulations that some feel have stifled business.

A new Jefferies research report features its third big change for 2017. The analysts remove red-hot telecommunications stock T-Mobile US Inc. (NYSE: TMUS) from the Franchise Picks list, as they believe the thesis for owning shares has played out.

T-Mobile provides mobile communications services in the United States, Puerto Rico and the U.S. Virgin Islands. It offers voice, messaging and data services in the postpaid, prepaid and wholesale markets. It also provides wireless devices, including smartphones, tablets and other mobile communication devices, as well as accessories that are manufactured by various suppliers.

The company offers services, devices and accessories under the T-Mobile and MetroPCS brands through its owned and operated retail stores, as well as through its websites. T-Mobile also sells its devices and accessories to dealers and other third-party distributors for resale through independent third-party retail outlets and websites. It serves approximately 63 million customers.

Jefferies was right on this stock for a long time, and the firm keeps a Buy rating, with a $71 price target. The Wall Street consensus target on the stock is $66.04. The shares closed most recently at $63.20.

We also screened the Franchise Picks portfolio for the top dividend-paying stocks and found four that long like great buys now.

AbbVie

This is one of the top global 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’s mission is to use its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world’s most complex and serious diseases. AbbVie employs more than 26,000 people worldwide and markets medicines in more than 170 countries.

One of the biggest concerns with AbbVie is what eventually might happen with anti-inflammatory therapy Humira, which generated $14 billion in sales in fiscal 2015. That was the most any drug has recorded during a single year and represents a gigantic part of the company’s overall earnings. The problem is that biosimilars and generics are itching to enter the market with Amgen leading the charge, and some Wall Street analysts project that AbbVie may have a difficult time stopping that trend.

Last year, the patent board instituted Coherus BioSciences’ Inter Partes Review against the Humira ‘135 patent. While most analysts remain positive on Humira duration, the expected litigation uncertainty could continue to create an overhang on the stock, which does give investors chances to pick up shares lower.

AbbVie investors receive a 4.14% dividend. Jefferies has a $90 price target, and the consensus target is $69.78. Shares closed Tuesday at $61.83.