After an outstanding 2014, the health care sector could be primed for yet another solid performance in 2015. While many analysts on Wall Street are very positive on the group, most agree that the returns most likely will not reach the 20% plus level that investors saw this year. In a new research report, the SunTrust Robinson Humphrey team highlights the top pharmaceutical stocks to buy for 2015.
The analysts at SunTrust believe that deals could continue to drive pharmaceutical momentum. They also are of the opinion that pharmaceuticals will outperform in 2015, driven by new product innovation and a very attractive five-year growth rate. They also note the group as a whole is under-owned as a percentage of the S&P 500.
SunTrust’s top pharmaceutical stocks to buy for 2015 include Merck & Co. Inc. (NYSE: MRK), Bristol-Myers Squibb Co. (NYSE: BMY), Eli Lilly & Co. (NYSE: LLY), Shire PLC (NASDAQ: SHPG) and Flamel Technologies Ltd. (NASDAQ: FLML).
Shares of this top pharmaceutical pick at SunTrust for 2015 have enjoyed a solid year for investors, up more than 15%. Merck also remains a leading health care company that is on the focus lists of many of the top firms we cover. The company’s numerous prescription medicines, vaccines, biologic therapies and consumer care and animal health products are provided to customers in more than 140 countries.
Many Wall Street analysts feel that Merck’s purchase of Idenix this past summer for $3.85 billion to acquire its hepatitis C pipeline could pay off huge for investors in the future. They also note that the recent purchase of Cubist Pharmaceuticals, which puts Merck firmly in the antibiotic category, should be closed by the first quarter of next year.
The pharmaceutical giant pays shareholders a very solid 3.1% dividend. The SunTrust price target for the stock is $80. The Thomson/First Call consensus price target is $63.92. Merck closed Friday at $57.78 a share.
The SunTrust team feels this stock could have multiple clinical catalysts in 2015. They point to the company looking for approval for its Daklinza drug, which has already been approved in Europe for treatment of hepatitis C. The drug is effective across several genotypes of diseases and has shown cure rates of up to 100% when used in combination with Gilead Sciences’ blockbuster drug Sovaldi.
Bristol Myers investors are paid a 2.5% dividend. The SunTrust target price is $64. The consensus target is $57.21, but note the stock closed Friday at $59.58.