Large Cap Blue Chips Dominate Jefferies Top Value Stocks to Buy

Investing

Published: March 9, 2016 10:10 am

Last Updated: January 13, 2020 12:11 pm

Despite the nice move back up in the markets, many stocks are trading substantially lower than they were this time last year. While investors have started to buy some of the beaten down companies, it’s pretty easy to spot a reluctance to go all-in as volumes remain low. And many experts think much of the current buying is no more than short covering, especially in the energy sector. One thing the selling has done is taken many top large cap growth stocks and moved them into value territory on a price basis.

In a recent research report, Jefferies focused on some large cap stocks that are still trading way below their 52-week highs. At current levels they offer investors not only a solid entry point, but some serious upside potential. All are rated Buy at Jefferies.

AbbVie

This is the top global pharmaceutical stock at Jefferies and is also on the Franchise Stock Picks list. 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 markets medicines in more than 170 countries.

One of the biggest concerns is what might happen with AbbVie’s anti-inflammatory therapy Humira, which generated $14 billion in sales in fiscal 2015. That is the most any drug has recorded during a single year and represents a gigantic part of the company’s overall earnings. The problem with Humira 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 feels that the company’s response to Coherus’ Inter Partes Review (IPR) on key Humira patents looks solid and an IPR denial is a very real possibility.

The company reported mixed fourth-quarter numbers but affirmed guidance, and some on Wall Street were concerned over a new hepatitis C drug from a rival company. AbbVie reported earnings per share that were up 27% from the year-earlier quarter and a penny over analysts’ consensus, according to Thomson Reuters. Revenue rose 18% but fess short of estimates. Jefferies cites the company’s very cheap valuation and strong catalysts this year as reasons for moving it to the top global pick.

AbbVie investors receive an outstanding 4.12% dividend. The Jefferies price target is $80, among the highest on Wall Street. The Thomson/First Call consensus target is $72.25. Shares closed Tuesday at $55.32.