As the pharmaceuticals industry looks toward restructuring and separation of undervalued assets, Jefferies analysts have prepared a highly proprietary sum of the parts analysis for their coverage universe to find the best opportunities. They also contend that big pharmaceutical stocks remain attractive and that some of the restructuring plays may offer investors the best upside. While remaining highly focused on dividend yield as a relative and absolute driver of future performance, the restructuring plays may offer the best upside as valuation of the sector starts to narrow.

Here are the top big pharmaceutical stocks to buy and the best restructuring plays.

Abbott Laboratories (NYSE: ABT) ranks high on the Jefferies restructuring list. Abbott has been moved to third place from seventh previously, and is now Jefferies top U.S. pick. Jefferies anticipates a positive inflection in revenue and earnings growth from the second half of this year as the established pharmaceuticals business performance improves. Jefferies raises its price target from $43 to $46. The Thomson/First Call estimate is $40. Investors receive a 1.5% dividend.

Novartis A.G. (NYSE: NVS) is the top European pharmaceutical restructuring play at Jefferies. Novartis is now the top pick due to the greatest total upside available versus current prices, as well as having the most restructuring potential over the next 12 to 18 months. Jefferies raises its price target from $76 to $79 on a dollar adjusted basis, while the consensus is at $73. Investors receive a 3.5% dividend.

Merck & Co. Inc. (NYSE: MRK) is upgraded to Buy from Hold. Management clearly has begun to recognize pressure from shareholders for better returns by the activation of an accelerated share repurchase program. Jefferies also believes that further pressure over the next 12 to 18 months will lead to some restructuring of the business, with consumer and animal health being the most likely assets that could be sold or spun out. The price target goes from $48 to $54, while the consensus target is $51. Shareholders are paid a 3.7% dividend.

AbbVie Inc. (NYSE: ABBV) remains a top stock to buy at Jefferies. With a current market cap of $69.10 AbbVie has become the 49th largest company in the S&P 500. Jefferies raises its price target $3 to $54, and the consensus target is much lower at $48. Investors receive a 3.7% dividend.

Bristol-Myers Squibb Co. (NYSE: BMY) has been on a tear for the past month. Investors clearly are excited about the company’s nivolumab, which helps the immune system fight cancer tumors. Jefferies hikes its price target from $45 to $53.50, but the consensus target is much lower at $45.75. Shareholders are paid a 3.0% dividend.

Pfizer Inc. (NYSE: PFE) finishes off the list of large cap pharmaceuticals to buy at Jefferies. With strong fundamentals and a sound approach to operations, the company is expected to report improved results next quarter after a disappointing first quarter of 2013. Jefferies keeps its price target at $33, while the consensus estimate is at $32. Investors are paid a 3.5% dividend.

Seeking out the next most likely large cap pharmaceuticals restructuring opportunities for investors would seem to be a worthwhile pursuit, given the rising interest and valuations in the sector. Even if restructuring efforts take some time, the total return potential of the stocks make them a good fit in any portfolio.

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