One key analyst firm is continuing to look at which companies in the health care space are going to return the most in 2016. For the most part, Jefferies maintained its list of top companies in the sector, but it also made a couple additions and updated its price target information and how much upside to expect.

As far as the overall sector is concerned, Jefferies sees strong underlying fundamentals, though somewhat clouded by an overall poor guidance season for 2016 earnings, a light catalyst calendar in the first half of the year, ongoing foreign exchange headwinds for the majority of companies and the overhang around U.S. pricing from the upcoming U.S. presidential election.

AbbVie Inc. (NYSE: ABBV) remains the Top Global Pick at Jefferies, as it sees decent odds for denials of inter partes review (IPR) against AbbVie’s ‘135 patent, which allows it to maintain control of Humira and other biosimilars, and significant valuation upside even on the “worse case” Humira biosimilar scenario. The firm continues to like Novartis A.G. (NYSE: NVS), Pfizer Inc. (NYSE: PFE) and Eli Lilly and Co. (NYSE: LLY). Others, such as Johnson & Johnson (NYSE: JNJ), GlaxoSmithKline PLC (NYSE: GSK), Bristol-Myers Squibb Co. (NYSE: BMY) and Merck & Co. Inc. (NYSE: MRK), remain least preferred names.

In its report, Jefferies detailed:

We continue to believe that Roche (in particular) and Pfizer could emerge as dominant forces in IO, given their greater R&D firepower, broad access to combinations and differentiated (PD-L1) backbones compared to Bristol-Myers and Merck. Whilst AACR looks like it will provide limited clinical data, we will look for incremental tidbits on mechanisms including OX40, 4-1BB/ CD137, KIR, LAG3, IDO, GITR, which we expect to get clinical combination data (with PD-1/ L1) on during 2016.

Jefferies listed its calls as:

• AbbVie has a Buy rating with an $80 price target.
• Novartis has a Buy rating.
• Pfizer has a Buy rating with a $42 price target.
• Eli Lilly has a Buy rating with a $105 price target.
• Roche has a Buy rating.
• Zoetis has a Buy rating with a $53 price target.
• Abbott has a Buy rating with a $47 price target.

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