Jefferies Makes Changes to Top Pharmaceutical Stocks to Buy

We screened the Jefferies list for the top stocks to buy now, and highlight those that have moved up in preference. All are rated Buy at the firm.

Pfizer

This top pharmaceutical stock jumps up the Jefferies list to the current top pick. Pfizer Inc. (NYSE: PFE) rocked Wall Street this year, 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) 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 that Wall Street likes.

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With a strong pipeline, and the fact that Pfizer is the world’s largest drug manufacturer by sales value, many analysts feel the company can generate higher long-term revenues through the accelerated growth of its new drugs over the next five years, with Ibrance leading the way. Plus, many feel the company continues to look for a blockbuster deal, with Shire, GlaxoSmithKline and Mylan all potential targets.

Pfizer investors are paid a solid 3.3% dividend. The Jefferies price target for the stock is $45. The Thomson/First Call consensus price target is $37.21. Pfizer closed Thursday at $34.36 per share.
AstraZeneca

This stock moves into the number two slot, and it offers investors a solid entry point after see-sawing the past year. AstraZeneca PLC (NYSE: AZN) is a global, innovation-driven biopharmaceutical business that focuses on the discovery, development and commercialization of prescription medicines, primarily for the treatment of cardiovascular, metabolic, respiratory, inflammation, autoimmune, oncology, infection and neuroscience diseases. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide.

This company also has an outstanding pipeline especially in oncology. The broad pipeline of next-generation investigational medicines is focused on four main disease areas: ovarian, lung, breast and haematological cancers. These are being targeted through four key platforms: immuno-oncology, the genetic drivers of cancer and resistance, DNA damage repair and antibody drug conjugates.

Oncology is a therapeutic area in which AstraZeneca has deep-rooted heritage. It will be potentially transformational for the company’s future, becoming the sixth growth platform. The long-term corporate goal is to help patients by redefining the cancer treatment paradigm and one day eliminate cancer as cause of death. By 2020, the company is aiming to bring six new cancer medicines to patients.

AstraZeneca shareholders are paid an outstanding 4% dividend. The Jefferies price objective for the stock was unavailable, but the consensus target is at $75.97. The stock closed Thursday at $69.86.

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AbbVie

This stock drops from number one to number three but is still a top name to buy. 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 employs more than 26,000 people worldwide and markets medicines in more than 170 countries

The company reported outstanding first-quarter earnings, as Humira sales continued on at a torrid pace. Larry Robbins from Glenview Capital said recently he believes that the stock is trading relatively “cheap,” and that AbbVie’s pipeline is underappreciated as it will be difficult for competitors to make a generic version of its Humira, a drug to treat rheumatoid arthritis and Crohn disease.

The Jefferies team points to numerous clinical read-outs for the stock over the rest of 2015. Many on Wall Street think that over time the stock could have anywhere from $15 to $25 per share upside from current levels.

AbbVie investors are paid a very solid 3.11% dividend. The Jefferies price target is a stunning $86. The consensus target is lower at $72.73. Shares closed Thursday at $65.65.

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Eli Lilly

This stock checks in at number five on the Jefferies list. Eli Lilly & Co. (NYSE: LLY) is somewhat surprisingly out of consensus with portfolio managers at mutual fund and hedge funds, or what is known as the buy side. It also has more Neutral ratings than Buy ratings on Wall Street.

The company easily beat analysts’ earnings expectations for the first quarter, reporting earnings of $0.87 per share that topped guidance of $0.76 per share. Revenues for the period declined 1% to $4.65 billion, but were still enough to top analysts’ $4.63 billion expectations.

While generic competition is eating into profits with the company’s Cymbalta and Evista drugs, and currency headwinds took a toll on overseas sales, the drug giant still affirmed forward expectations. The company’s new cancer drug Cyramza won FDA approval for label expansion just last month. It treats patients suffering from metastatic colorectal cancer. This was the fourth Cyramza approval in a one-year period; it already has approval to treat advanced or metastatic gastric or gastroesophageal junction adenocarcinoma and metastatic non-small cell lung cancer. Cyramza has so far generated sales of $67.5 million.

Eli Lilly shareholders are paid a solid 2.7% dividend. The Jefferies price target is $87, and the consensus target is $79.53. Shares closed Thursday at $74.27 apiece.

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With a very toppy and pricey stock market, investors may want to scale capital into these top stocks to buy and look for a market pullback to add more shares.