If there is one thing that the pharmaceutical industry tries to shy away from it is the controversy over the costs of some of the drugs on the market today. Gilead Sciences’ announcement that it will offer larger discount pricing on the hepatitis C drugs Sovaldi and Harvoni was met with a massive sell-off of the stock. With pressure from competition to the government, from pharmacy benefit managers to currency headwinds, the big pharmaceutical companies are facing some big headline risk and earnings pressure.

A new research report from J.P. Morgan acknowledges all the potential issues for the major U.S. drug companies, and it submits that despite a 5% sell-off in the group, and the negatives mentioned above, the analysts remain optimistic on the top large cap stocks to buy.

AbbVie Inc. (NYSE: ABBV) was at the center of the Gilead issues and was hit extremely hard Wednesday. Pharmacy managers are taking sides on which hepatitis C drugs they will be offering to patients based on the discounts provided by the companies making the drug. In effect, it becomes somewhat of a price war, and price wars ultimately evaporate earnings. The J.P. Morgan team remain positive on the stock, especially after the massive sell-off.

AbbVie investors are paid a very solid 3.45% dividend. J.P. Morgan has the stock rated at Overweight with a price target at $73. The Thomson/First Call consensus price target is $69.07. AbbVie closed Wednesday at $56.91, down a stunning 7.7%.

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Bristol-Myers Squibb Co. (NYSE: BMY) is another large cap stock preferred at J.P. Morgan. In late December, the U.S. Food and Drug Administration (FDA) granted accelerated approval to Opdivo (nivolumab), a new treatment for patients with unresectable (cannot be removed by surgery) or metastatic (advanced) melanoma who no longer respond to other drugs. The analysts are bullish on the drug and look for updates and launch information to be forthcoming.

Bristol-Myers investors are paid a 2.5% dividend. J.P. Morgan puts a $70 price target on the Overweight-rated stock. The consensus target is much lower at $62.28. Shares closed trading Wednesday at $59.24.

Eli Lilly & Co. (NYSE: LLY) has faced some of the more negative stock coverage from Wall Street, and some analysts may have overfocused on patent expirations on key products, which has kept enthusiasm very muted. Eli Lilly and partner Boehringer Ingelheim recently received FDA approval for Glyxambi (Jardiance/Tradjenta) tablets for use as an adjunct to diet and exercise to improve glycemic control in adults with type II diabetes. The FDA approval of Glyxambi helps to make up for the loss of revenues from the genericization of drugs like Cymbalta and Evista, which hurt fourth-quarter earnings.

Eli Lilly investors are paid a 2.85% dividend. J.P. Morgan has a Neutral rating on the stock and a $74 price target. The consensus target is right in line at $74.11. Shares closed Wednesday at $70.22.

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Merck & Co. Inc. (NYSE: MRK) is a top pharmaceutical pick rated Overweight at J.P. Morgan for 2015. The company enjoyed a solid 2014 for investors, up over 15%. It also remains a leading health care company that is on the focus lists of many of the top firms we cover. The company’s numerous prescription medicines, vaccines, biologic therapies and consumer care and animal health products are provided to customers in more than 140 countries. Many Wall Street analysts feel that company’s purchase of Idenix last year for $3.85 billion to acquire their hepatitis C pipeline could pay off huge for investors in the future. The J.P. Morgan analysts feel that pipeline updates and a mid-2015 filing for Keytruda in advanced non-small cell lung cancer are key.

The pharmaceutical giant pays shareholders a tidy 3.05% dividend. The J.P. Morgan price target is $68, and the consensus target is set at $64.39. Merck closed Wednesday at $59.05.

Pfizer Inc. (NYSE: PFE) rocked Wall Street Thursday, announcing a gigantic $15.2 billion purchase of Hospira. Hospira shareholders will be paid $90 a share. Hospira is a top provider of sterile injectable drugs, including those used for acute care and cancer treatment and infusion technologies and biosimilars, which are subsequent versions of drugs with patents that have expired. In other recent solid news for Pfizer, the company’s drug Ibrance was approved for advanced breast cancer by U.S. regulators more than two months ahead of schedule, letting the drug maker proceed with one of its most promising new blockbusters, a turn of events the J.P. Morgan team likes.

Pfizer investors are paid a solid 3.5% dividend. The J.P. Morgan price target is $35, and the consensus target is $35.12. Pfizer closed Wednesday at $32.07.

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While the J.P. Morgan analysts are fully aware of the currency impact of a strong dollar, and the high multiples for these top pharmaceutical companies, they note that strong product pipelines could drive earnings above estimates. Also, with a very pricey overall stock market, defensive drug stocks make good sense in a more conservative long-term growth portfolio.

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