With 2020 almost over and the new year just two short weeks away, many investors are resetting for what could be a volatile 2021. The ongoing trade issues and political conflicts with China, geopolitical instability in the Middle East and lingering questions over the November election results could continue to stir the pot some. While the rally off the March and September lows has been positive, it makes sense for investors to find the best possible stock ideas from the top analysts and firms.
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One of Wall Street’s most respected lists of stocks is the Goldman Sachs Americas Conviction List. These are the firm’s top picks for high net worth and institutional accounts spread across 10 sectors. While these are absolutely the favorite ideas at Goldman Sachs, it is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

In a move that investors looking for more defensive ideas should applaud, the analysts add Bristol-Myers Squibb Co. (NYSE: BMY) to the Conviction List. The company 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’s products include the following:

• Opdivo for anti-cancer indications
• Eliquis, an oral inhibitor targeted at stroke prevention in adult patients with non-valvular atrial fibrillation, and the prevention and treatment of venous thromboembolic disorders
• Orencia for adult patients with active RA and prostate-specific antigen, as well as reducing signs and symptoms in pediatric patients with active polyarticular juvenile idiopathic arthritis.

Just this week, Bristol-Myers reported that its wholly-owned subsidiary, Celgene, has settled litigation with Cipla related to patents for Revlimid. The settlement enjoins Cipla from marketing generic lenalidomide before the expiration of the patents-in-suit, except as provided for in the settlement. Celgene also has agreed to provide Cipla with a license to Celgene’s patents required to manufacture and sell certain volume-limited amounts of generic lenalidomide in the United States at some point after March 2022.

Shareholders receive a very reliable 3.13% dividend. Goldman Sachs raised the price target on the shares to $86 from $82. The Wall Street consensus target is $74.29, and Bristol-Myers stock closed trading on Tuesday at $62.57, up over 4% on the day.

We screened the Americas Conviction List and found four additional health care stocks that look like outstanding ideas for growth investors looking to initiate or increase holdings in the sector.

This Wall Street favorite is a solid play for investors who are more aggressive. BioMarin Pharmaceuticals Inc. (NASDAQ: BMRN) develops and commercializes innovative biopharmaceuticals for serious diseases and medical conditions. Its product portfolio comprises five approved products and multiple clinical and preclinical product candidates.
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Over the past decade, BioMarin has become one of the top orphan drug companies, and it looks poised to stay there.  Roche recently has been mentioned as a company that could be looking at BioMarin. Roche is focused on oncology drugs and invests heavily in early-stage molecules.

In November, BioMarin reported third-quarter beats on the top and bottom lines, but it provided mixed 2020 guidance. The COVID-19 recovery could see some volatility due to BioMarin’s global business, but focus remains on Roctavian and vosoritide. Most on Wall Street expect an acceleration of top-line growth with the launches of vosoritide and Roctavian in the next year or two.

The Goldman Sachs price objective is a gigantic $188, while the consensus price target is $108.24. BioMarin Pharmaceuticals stock closed at $85.03 on Tuesday.

Eli Lilly

This is another large-cap pharmaceutical on the Americas Conviction List with solid upside potential, and it is a great pick for conservative 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.

This week, Eli Lilly announced better than expected 2021 guidance, raising 2020 ranges on both top and bottom lines. COVID-related revenue of $1 billion to $2 billion is a bonus on top of the company’s already strong commercial portfolio. Its $880 million Prevail acquisition fills a hole in the pipeline.

In addition, Eli Lilly announced Monday that it is raising its quarterly dividend by 15%. It will pay its first $0.85 per-share distribution next March 10 to investors of record as of February. The increase in the dividend will push the yield to 2.11%. The current yield is 1.77%

Goldman Sachs has a $183 price target on Eli Lilly stock. That compares with the $168.65 consensus target and Tuesday’s closing price of $167.43, after more than a 6% gain for the day.

This is another health care idea for investors that want to start or add to a position in the sector. McKesson Corp. (NYSE: MCK) is the largest drug distributor in the United States, as well as having sizable businesses in Canada and Europe, including distribution and retail pharmacy assets. The company is also the largest medical-surgical distributor to the non-acute care market and offers various supply chain services and technology, although recently divested its clinical health IT platform.
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McKesson’s U.S. Pharmaceutical segment distributes branded, generic, specialty, biosimilar and over-the-counter pharmaceutical drugs and other health-care-related products. The Prescription Technology Solutions segment operates in the health care delivery system to connect pharmacies, providers, payers and biopharma for next-generation patient access and adherence solutions.

The International segment provides drug distribution services, specialty pharmacy and retail and infusion care services. Lastly, the Medical-Surgical Solutions segment distributes medical-surgical supplies and provides logistics and other services to health care providers.

Investors receive a 0.97% dividend. The $215 Goldman Sachs price is well above the $197.50 consensus target. McKesson stock closed most recently at $173.08 a share.

Regeneron Pharmaceuticals

This is a top biotech play for aggressive investors to consider.

Regeneron Pharmaceuticals Inc. (NASDAQ: REGN) is a biopharmaceutical company focused on the development of therapeutic human antibodies for the treatment of eye disorders, hypercholesterolemia, cancer, inflammation and other diseases.

Regeneron’s product sales are driven principally by its VEGF inhibitor Eylea, which is approved for use in wet age-related macular degeneration and diabetic macular edema, and by Praluent for the treatment of hypercholesterolemia.

Back in the fall, President Trump was treated for the coronavirus with the company’s experimental “cocktail” therapy, which is two monoclonal antibodies. That is, manufactured copies of antibodies that are one of the main weapons the immune system generates to fight infections. Regeneron has received $450 million from the U.S. government for up to 300,000 doses of the dual-antibody cocktail, and the company has said those supplies would be distributed free of charge.

The bullish stance on the shares owes to the probability of an adjusted net present value analysis of Eylea, including revenues from the Bayer collaboration, ($263 per share); Sanofi collaboration revenue, including Dupixent and other product revenues, ($211 per share); Libtayo ($70 a share); early pipeline assets ($47 a share);  as well as approximately $34 per share in net cash.

Goldman Sachs has set a $793 price target. The consensus target is $673.13, and Regeneron Pharmaceuticals stock was last seen at $491.79.

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These are five of the best health care stocks, and all are members of the Goldman Sachs Americas Conviction List. Given the surge in the markets, and the prices of some of these stocks, it makes sense to scale buy into a position, as it is very possible we could see some consolidation after a big run off the March and September lows in January.

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