Despite recent market headwinds and volatility, there are strong underlying fundamentals among the large cap pharmaceuticals that are continuing to drive them forward. One key analyst issued a few of its top picks for the industry, considering the current market situation, election season and all. Jefferies now sees a more even balance between the overhang around U.S. pricing from the upcoming election and the search for yield, post-Brexit, which could benefit many companies in its universe.

Ultimately the firm noted that AbbVie Inc. (NYSE: ABBV) remains its top pick globally, followed by Eli Lilly and Co. (NYSE: LLY), Novartis A.G. (NYSE: NVS), AstaZeneca PLC (NYSE: AZN) and Zoetis Inc. (NYSE: ZTS).

Jefferies also explained that there could be more risk with Some of the U.S. companies that have been supported by dividend yields, such as Johnson & Johnson (NYSE: JNJ), Merck & Co. (NYSE: MRK) and Pfizer Inc. (NYSE: PFE), which could suffer if the Federal Reserve raises rates faster and further than expected.

Investors have become more engaged discussing large cap pharmaceuticals again, following a volatile end to third-quarter earnings with Novo Nordisk (NYSE: NVO), the CM-026 data and fresh proposals from the Clinton camp. Buy-side sentiment has cooled on Novo and Bristol-Myers Squibb Co. (NYSE: BMY), though there still seems room for downside to expectations for both. Jefferies gets most bullish incoming calls on AstraZeneca, Bayer and Sanofi, with the latter feeling most like a value trap near term. Sentiment on the sector has turned more negative, with a renewed focus on U.S. pricing, though most investors are not clear on exactly what proposals trouble them the most.

The firm sees the European Society for Medical Oncology in early October as likely positive for Merck and negative for Bristol-Myers as comparisons at the 50% cut-off likely favor Merck. Jefferies expects Novartis to show better data for LEE011 in MONALEESA-2 compared to Ibrance, which could act as a strong driver of more positive investor sentiment for Novartis. Roche’s OAK data in 2/3L non-small cell lung cancer could act as a positive catalyst, whilst putting further pressure on Bristol-Myers as Opdivo likely faces increasing pressure in this setting.

Novartis shares did not react to the surprise positive read out of BAF312 in secondary progressive multiple sclerosis, likely because investors still expect the need for additional Phase 3 studies before it can be filed. However, the magnitude of the benefit seen at ECTRIMS could change this and the company is also discussing the potential for an early filing with regulators.

Shares of AbbVie were trading at $64.08 on Tuesday, with a consensus analyst price target of $71.47 and a 52-week trading range of $45.45 to $68.12. Jefferies has a Buy rating for AbbVie with a $90 price target.

Eli Lilly was trading at $79.08 a share. The consensus price target is $96.70, and the 52-week range is $67.88 to $92.85. Jefferies has a Buy rating and a $105 price target.

Novartis shares were last seen at $80.28, within a 52-week range of $69.90 to $98.95. The consensus price target is $94.75.

Shares of AstraZeneca recently traded at $33.24. The consensus price target is $35.50. The 52-week range is $26.97 to $35.04.

Zoetis was changing hands at $51.15, with a consensus price target of $54.50 and a 52-week range of $38.26 to $52.64. Jefferies has a Buy rating and a $60 price target on Zoetis.

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