Needless to say, the health care sector, especially pharmaceuticals and biotech, have taken a rhetorical beating from politicians looking to force the blame for high drug prices on some of the top companies. While prices on some are indeed high, and perhaps should be lowered, the fact of the matter is, it is incredibly expensive to get a new drug to approval and the market. The selling of these stocks could give investors a great entry point.
One of the firms we cover here at 24/7 Wall St. is UBS, and it is cautiously positive on the overall health care sector. The analysts have the sector rated moderate overweight, and the preferred segments are pharmaceuticals and healthcare providers and services. We found four stocks in the Most Preferred Pharmaceuticals list that pay top dividends.
This is the top global pharmaceutical stock at Jefferies. 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.
Some Wall Street analysts project that AbbVie may have a difficult time stopping that trend. Jefferies has become much more positive on the stock and feel that the company’s response to the Coherus inter partes review (IPR) on key Humira patents looks solid and an IPR denial is a very real possibility.
Back in January, senior management at the company gave sales guidance that calls for Humira sales to climb, rather than shrink, to $18 billion by 2020. If so, then AbbVie still has time to build momentum for other drugs that can offset any future impact from biosimilars.
AbbVie investors are paid an outstanding 3.76% dividend. The Thomson/First Call consensus price target is posted at $71.06. The stock closed most recently at $60.70 per share.
This top company remains a favorite at UBS. 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 the FDA has approved Opdivo for the treatment of classical Hodgkin lymphoma in patients who have relapsed or progressed after autologous hematopoietic stem cell transplantation and post-transplantation Adcetris. The accelerated approval of Opdivo in the cHL indication was based on the overall response rate. This marks the very first PD-1 inhibitor to be approved for a hematological malignancy.
Bristol-Myers shareholders are paid a 2.15% dividend. The $76.29 consensus price target compares with the most recent closing share price of $71.23.