For years the big pharmaceutical companies have had the spotlight of drug pricing cast brightly upon them often. Politicians gang up with heated rhetoric during election seasons, and now President Trump is also criticizing their pricing structures. While the prices for many drugs are indeed high, the cost to bring those drugs to the marketplace can run in the billions, and clinical failure can mean a total loss.

All in all, despite some of the negative publicity, the major pharmaceutical companies have fared reasonably well in 2018, and four of the big industry leaders are poised to report second-quarter results next week. John Boris from SunTrust sees the relatively good print from Johnson & Johnson Inc. (NYSE: JNJ), which featured a positive currency tailwind, as a good signal for the group as a whole.

These four stocks are rated Buy and may be good purchases for growth accounts looking for safety and total return going forward.

AbbVie

This is one of the top pharmaceutical stock 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 develops and markets drugs in areas such as immunology, virology, renal disease, dyslipidemia and neuroscience.

One of the biggest concerns with AbbVie is what might eventually happen with anti-inflammatory therapy Humira, which has some of the largest sales for a drug ever recorded. Last year the patent board instituted Coherus’s Inter Partes Review against the Humira ‘135 patent. The problem with Humira is that biosimilars and generics are itching to enter the market.

The SunTrust analysts remain positive on the shares and noted this in their report:

Our price target assumes the stock trades at ~17.3x our 2019 estimated EPS, a premium to the company’s major biopharmaceutical peer group. We expect AbbVie to trade at a premium to its group as it settles US patent disputes on Humira and its pipeline matures, with multiple data readouts on immunology, hematology and oncology assets play out. Our model assumes Humira total sales account for 42% of sales in 2023E, while its immunology & hematology/oncology sales from new products and label expansion of existing assets rises to 35% of sales.

AbbVie shareholders are paid a rich 4.27% dividend. The SunTrust price target for the shares is whopping $157, and the Wall Street consensus target is just $113.05. The stock closed trading on Thursday $89.95 a share.

Bristol-Myers Squibb

This remains a solid pharmaceutical stock to own. 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 announced last year that Biogen will pay $300 million upfront to Bristol-Myers to license a palsy drug with a $2 billion market opportunity and the potential to use that to treat Alzheimer’s. The company will pay a total of $410 million in milestone payments and a tiered double-digit royalty to license a drug known only as BMS-986168.

The analyst noted this in the report on the stock when discussing valuation:

Our price target assumes the stock trades on ~17.3x our 2019 estimated EPS, which is a premium to its major biopharmaceutical peer group. We believe the company deserves a premium based on its growth prospects and substantial premium that an acquisition bid could command. Our price target is supported by a discounted cash flow analysis (DCF) value of $69. We believe the company’s attractive growth, dividend yield and M&A potential puts a floor under the stock.

Shareholders are paid a solid 2.83% dividend. SunTrust has a price target is of $65, while the posted consensus target was last seen at $57.56. The shares closed trading Thursday at $56.54.

Eli Lilly

This is another company with solid upside potential and a safer profile for investors. Eli Lilly and Co. (NYSE: LLY) is a global health care company with numerous core products in a number of primary-care pharmaceutical markets. The company generates revenues from its pharmaceutical product and animal health segments.

The product portfolio includes Zyprexa (for schizophrenia and bipolar disorder), Gemzar (pancreatic cancer), Evista (osteoporosis), Cymbalta (depression), Cialis (erectile dysfunction), Strattera (attention deficit hyperactivity disorder), Erbitux (cancer) and Alimta (chemotherapy). Eli Lilly also has a strong presence in the diabetes market.

The stock remains a favorite, and the analysts said this in the research report:

Our price target assumes the stock trades at ~17.6x our 2019 estimated EPS. This reflects a premium to both the current and forward group average and the S&P forward P/E multiple. We think a premium to the group average multiple is justified given Lilly’s diversified volume-driven sales growth and operating leverage. Our price target is supported by a discounted cash flow (DCF) intrinsic value of >$100 per share.

Investors in Eli Lilly are paid a 2.52% dividend. The $101 SunTrust price target compares with the $92.47 analyst consensus target. The shares closed at $89.43 on Thursday.

Merck

This remains 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.

Merck also remains a good play for conservative accounts, the analyst said this about the company.

Our target price assumes Merck trades at ~16x our 2019 estimated EPS estimate, supported by a discounted cash flow (DCF) model. The ~16x multiple on 2019 estimated EPS is above the group average of ~12.5x, which we think is appropriate, given the company’s leadership in the Immuno-Oncology space and Keytruda’s first-mover advantage in 1 line non small cell lung cancer.

Merck shareholders receive a 3.07% dividend. SunTrust has set its price target at $74. The consensus target price is $69.44, and the shares closed Thursday at $62.51 apiece.

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These are four top pharmaceutical stocks for investors to look at prior to reporting the second-quarter results next week. All have had solid price moves higher in 2018, so it may make sense to buy partial positions in front of the results just in case they miss the earnings mark or guidance is less than expected.

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