Based on experience and fundamentals, Credit Suisse has identified the US biopharma major as a safe-haven fund among key risks. Starting with a spread of seven major US drug stocks with four Outperform ratings, analysts Trung Huynh and Carson Wong made their recommendations. using the company’s proprietary databases and drawing information from over 120M Americans.
“With significant uncertainty remaining unresolved over the next few months, we view Large-Cap BioPharma as an important defensive position at a reasonable price,” the pair wrote in a research note on Thursday.
With the threat of Zantac in the case of many EU pharma giants Sanofi (SNY) and GSK (GSK), analysts favor their US counterparts, noting that the latter has done well during the recent instability and benefited from the rise of the greenback traded with USD gains.
In addition, the analysts note that while high-end pharma can withstand rising prices, its long-term growth drivers, large profits, and strong balance sheets remain intact. However, Huynh and Wong argue that despite investing more in the sector’s growth, the leading PE sector remains attractive compared to other security sectors.
Commenting on drug prices, the two say the concerns raised by the 2022 Inflation Reduction Act in the US are greater, and the impact of patent expiration beyond 2025 is uncertain.
Taking a deeper look at the industry, analysts select stocks that have “short- to medium-term growth and companies that can impact significant change through successful pipelines, acquisitions, and effective M&A.”
Credit Suisse is issuing Outperform ratings on Merck (MRK) and AbbVie (ABBV), naming the stocks as Outperforms based on their current underperformance and downside.
While Merck ( MRK ) is heavily dependent on its cancer drug Keytruda, concerns about its loss in 2028 are ongoing, analysts noted, estimating a 12-month price target of $120 and calling the stock its Biggest Pick.
AbbVie (ABBV) is the Value Pick. With a fee of $170 per share, analysts looked past the Humira patent pending next year, and indicated that the company offers the highest dividend yield among its peers, while Humira’s five-year CAGR only trails Eli Lilly ( LLY ).
Despite its industry-leading growth, Lilly ( LLY ) is facing a binary event in 2H 2023 with Phase 3 data expected for its Alzheimer’s candidate Donanemab that rivals experts. However, he gives an Outperform rating and a $395 price target for the company, noting that the risk/reward ratio is low and citing its potential in the obesity-related diabetes market.
Although its chances are closely related to a vaccine for COVID-19, what will happen in the future that is not known, Pfizer (NYSE: PFE) offers strong growth prospects even without the blockbuster hit made by BioNTech (BNTX), analysts wrote.
Pfizer (PFE) has lost ~15% this year, and Credit Suisse is reporting a favorable valuation for the company. In assigning an Outperform rating and a $55 target, analysts point to the underappreciated potential of its pipeline assets, including the respiratory syncytial virus (RSV) vaccine and mRNA-based influenza.
In August, the New York-based pharmaceutical giant said it would seek regulatory approval for its RSV vaccine RSVpreF in the coming months. The company has also started Phase 3 trials for a quadrivalent mRNA-based influenza vaccine candidate and Phase 1 trials for a combination COVID-19 vaccine based on the same technology.
At the start of the publication, Credit Suisse has given Neutral ratings on Bristol-Myers Squibb (BMY) and Johnson & Johnson (JNJ), which have traded flat over the past six months, as shown in the graph.
With $ 78 and $ 170 in the price of the company, respectively, the group sees their soft growth and complains about the special losses of some of the investors.
However, analysts shot Amgen (AMGN) with an Underperform rating at $240 per share, citing its recent price and long-term forecasts for its KRAS G12C inhibitor Lumakras to be approved by the FDA in 2021 for lung cancer.
Amgen ( AMGN ) has outperformed its competitors with a gain of ~14% over the past three months as Wall Street cheers on its original weight loss treatment AMG133.