When presidential candidate Hillary Clinton stirred the market this week with a campaign announcement on a proposed crackdown on drug pricing, and more regulations on the pharmaceutical industry, many of the top stocks took a big hit. In a new report, Merrill Lynch analysts say that Clinton’s rhetoric is just that, and would be very hard to enact.
Merrill Lynch points out that concerns are very overdone and reminds investors that the proposals are not new and have failed to gain momentum in the past when others have taken a similar path. They also note that Clinton is not yet the candidate for the Democrats and is a long way from the presidency. Lastly, the analysts point to the fact that the Republicans hold a majority in both the House and the Senate and are unlikely to support any of these issues.
One positive from the hammering the stocks have taken is the Merrill Lynch analysts say investors have been given a golden opportunity to buy the top companies at much better prices. We highlight four Buy-rated stocks from the Merrill Lynch research universe.
This top pharmaceutical stock has very solid growth potential. Abbott Laboratories (NYSE: ABT) is a leading diversified global health care company that develops, manufactures and markets branded generics, medical devices, nutritional products and diagnostic solutions. It recently agreed to acquire the equity in Minnesota-based Tendyne that it does not already own for $250 million plus future payments tied to regulatory milestones. Merrill Lynch likes the purchase and the way the company is putting its substantial balance sheet to work.
The company also offers a diversified large cap play as earnings are split between five well-positioned business segments: Nutritionals (31% of revenues), Vascular (13%), Generic Pharmaceuticals (20%), Diagnostics (25.5%) and Diabetes (10.5%).
Abbot Labs investors are paid a 2.27% dividend. The Merrill Lynch price target for the stock is $53, and the Thomson/First Call consensus target is $54.09. Shares closed Wednesday at $42.20.