Healthcare Business

JPMorgan Likes Big Cap Pharmaceutical Stocks as Market Volatility Jumps


This is a leading health care stock for conservative investors. Merck & Co. Inc. (NYSE: MRK) offers therapeutic and preventive agents to treat cardiovascular issues, type 2 diabetes, asthma, nasal allergy symptoms, allergic rhinitis, chronic hepatitis C virus, HIV-1 infection, fungal infections, intra-abdominal infections, hypertension, arthritis and pain, inflammatory, osteoporosis, male pattern hair loss and fertility diseases.

The company also provides neuromuscular blocking agents for use in surgery, anti-bacterial products for skin and skin structure infections, cholesterol modifying medicines, non-sedating antihistamine and vaginal contraceptive products.

The analysts remain very positive on Keytruda and noted this in the report:

Merck reported a tax-driven fourth quarter EPS beat and provided 2018 EPS guidance above consensus on both the top and bottom line. Tax will represent a benefit in 2018 but less so than some of Merck’s peers (19-20% tax rate, ~100-200 basis points lower than historical rate) with guidance reflecting core operating performance ahead of expectations. We see the potential for Keytruda to drive top-line upside as we move through 2018 and 2019 as the product continues to ramp in 1L non-small cell lung cancer.

Merck shareholders receive an outstanding 3.44% dividend. The $72 JPMorgan price target is well above the consensus target price of $67. The shares closed most recently at $55.88.


This top global pharmaceutical company made a gigantic splash with a $5.5 billion purchase of Anacor Pharmaceuticals. Pfizer Inc. (NYSE: PFE) is organized into two commercial segments. The Biopharmaceutical segment is focused on discovering, developing and marketing drugs for cardiovascular, metabolic, central nervous system, immunology, pain, infectious diseases, respiratory, oncology and other indications. The Diversified segment includes the consumer products division.

The analysts said this is their report:

Pfizer reports fourth quarter EPS above Street expectations but provided 2018 guidance that calls for in-line operating and better-than-expected EPS ($2.90-3.00 vs $2.80 consensus) on a lower-than-expected tax rate (17% vs ~23% historical). Looking beyond 2018, we see Pfizer positioned for improving growth trends post 2019 as the company moves past an extended period of patent expirations and launches several new product opportunities.

Investors in Pfizer are paid a very solid 3.89% dividend. The JPMorgan price objective is $42. The consensus price objective is $40.90, and the stock closed trading on Wednesday at $34.98 a share.

These four top companies already have long-standing franchises with huge sales and revenues. More conservative accounts may want to buy shares of these pharmaceutical giants now, as the market volatility could remain for some time, which could make higher beta companies more stomach churning.

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