June 20, 2016
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – If you’re looking for summertime pharma investments, the analysts at Motley Fool selected three blue-chip pharma companies as their favorites during a time-frame that many industry stocks are trading at near bargain prices.
Although the Fool’s analysts have recommended multiple pharma and biotech companies for long-term investments, the analysts selected these stalwart companies, Allergan , Roche and Johnson & Johnson , as companies that are poised to show big earnings.
Shares of Allergan hit a morning high of $240.41, but analyst Cheryl Swanson said stock price is poised to grow, especially if the deal to sell its generic drug business to Teva Pharmaceuticals goes through. The $40 billion deal would allow the company to retire a lot of its debt and provide it with enough income to snap up a few smaller biotechs in order to grow its revenue streams. Although Allergan’s merger deal with Pfizer fell through, the company has still been aggressive in M&A activity. In April, Allergan acquired Boston-based Topokine Therapeutics and its lead product, XAF5, a first-in-class topical agent to treat steatoblepharon, better known as bags under the eyes. One day after the Pfizer deal fell through, Allergan entered into an agreement with Heptares Therapeutics for exclusive global rights to a portfolio of novel subtype-selective muscarinic receptor agonists for the treatment of several neurological disorders, including Alzheimer’s disease. But, Allergan is not all about growth through acquisition. Swanson said Allergan has more than 70 drugs in mid- to late-stage drug trials and is looking at up to 14 drug approvals this year, with 16 filings for approval.
Although the Swiss drug giant Roche is facing the loss of revenue from some of its aging drugs, including cancer therapies Rituxan and Herceptin, the Fool’s Cory Renauer said Roche has one of the strongest late-stage drug pipelines in the industry. Although he did not specify which late-stage drug would be the spark for revenue, he predicted some of the company’s recently approved drugs “are headed for the stratosphere in the quarters ahead.” During the January J.P. Morgan Healthcare Conference, Roche was considered the favored stock by industry investors. Roche has also seen higher sales of drugs including Perjeta, Actemra, Xolair, and Activase, according to its latest quarterly report. Roche’s stock is up more than 2 percent this morning, currently trading at $245.80 per share.
The reason investors should look at J&J is because that company has three key points—stable operations, a history of treating shareholders well, and strong future growth prospects, analyst Brian Feroldi said. Johnson & Johnson is divided into three major operating segments—pharmaceuticals, medical devices, and consumer products—which is something Feroldi said should satisfy investors. And while the company is stable, Feroldi said he anticipates to see growth from its pharmaceutical division, particularly related to immunology and oncology therapies. Feroldi said the company plans to file for approval of 10 new drugs over the next few years that each have the potential to hit blockbuster status—annual sales of $1 billion. Shares of Johnson & Johnson are trading at $116.70 this morning.
