Ever since the Hillary Clinton high drug price tweet in September of last year, the major pharmaceuticals and biotechs have struggled, and while performance has improved over the past quarter, both areas have still lagged. While it’s possible the Democrats retain the White House, the Republicans look to hold Congress, and so many on Wall Street think that big drug pricing initiatives are unlikely after the election in November.
In a new research report, SunTrust Robinson Humphrey analysts feel that the major pharmaceutical companies will outperform the rest of the year, and they cite new products, accelerating long-term growth, attractive dividends and solid performance in a rising-rate environment as positives for the sector. Four top stocks are favored at the firm.
This stock 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.
The patent board recently instituted Coherus BioSciences’ Inter Partes Review against the Humira ‘135 patent. The outcome of the review is expected in 12 months. While most analysts remain positive on Humira duration, the expected litigation uncertainty could continue to create an overhang on the stock.
AbbVie investors are paid an outstanding 3.54% dividend. The SunTrust price target for the stock is $85, and the Wall Street consensus target is $70.17. The stock closed Monday at $64.32 per share.
This top company remains a favorite at SunTrust. 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 2.02% dividend. SunTrust has a target price of $86, and the consensus target is $77. The shares closed most recently at $75.56.