Daily Traders Edge

These 3 Standout Pharma Stocks Are Revving For Growth

January 10
10:15 2019

2019 is here, and it’s time to shake out some investment opportunities. Fortunately, the pharmaceutical industry has come through, with major companies showing positive market outlooks. That should be no surprise; top market strategists are betting that the market’s volatility will continue now that the New Year is behind us.

Jonathan Golub, US equities strategist for Credit Suisse, says, “Based on fundamentals, I don’t think the pullback we had in this market was ever justified. Markets will do what they’ll do. I think you have significant upside here.”

No two investments are identical in the strengths and headwinds facing them, but these three pharmaceutical companies all offer solid ground for growth, plus high-yield dividends to reward patient investors. TipRanks has gathered the analyst data, so we can dive in and take a closer look:

Amgen, Inc. (AMGN – Research Report)

The tenth-largest biopharma company in the US started the New Year on a high note, with a 9% rally from Christmas Eve. It was a strong stock performance for a company that had seen consistent gains through the year. Amgen’s most recent quarterly earnings, for Q3 2018, showed total revenues of $5.9 billion and GAAP EPS of $2.86, and free cash flow of $3.1 billion. In short, Amgen is starting 2019 in robust financial shape.

Top market analysts agree that Amgen is looking up. One month ago, on Dec 2, Oppenheimer’s Leah Rush Cann (Track Record & Ratings) reported on the company’s progress in the licensing and approval of Evenity, a new treatment for osteoporosis. Looking at the drug’s potential, she said, “We continue to estimate Evenity could account for $113.4 million in sales in 2022.” As for the company in general, Cann added, “We believe Amgen is in a position to have a long growth recovery as mature products decline to a stable level, new products continue to grow and the pipeline produces additional products.” Her price target of $224 suggests a 15% upside to the stock.

Also weighing in with positive reviews are four-star analysts Matthew Harrison of Morgan Stanley and Terence Flynn of Goldman Sachs. Harrison set a price target of $212, for a 9% upside.  Flynn, writing on Dec 7, gave Amgen a ‘buy’ rating and suggested a 20% upside with his price target of $232. Both analysts have been highly accurate with this stock; Harrison’s success rate is 95%.

While AMGN’s upside is modest, the stock excels in dividend payouts. Amgen has paid out every quarter since 2011, with the next dividend scheduled for this coming March. Even better than the consistency, the payment has improved from 28 cents per share seven years ago to $1.32 this past December. The upcoming dividend was announced as $1.45, making the yield 3%. See what other top analysts are saying about AMGN.

Gilead Sciences, Inc. (GILD – Research Report)

Gilead is has taken up the anti-viral niche, and produces medications for the treatment of HIV, Hep B, and Hep C. The company is the eighth largest pharmaceutical maker in the US, reflecting the importance of that market segment. Casual customers are most likely to encounter Gilead Sciences through its anti-influenza medication, Tamiflu. In recent developments, Gilead has an anti-inflammatory drug, filgotinib, in phase 3 testing for respiratory applications, and on Dec 10 named Daniel O’Day as company CEO.

Of all the stocks covered in this article, GILD has the highest upside potential at an impressive 42%. Top analysts have taken note of both the O’Day appointment and the potential of filgotinib. Michael Yee (Track Record & Ratings), writing for Jefferies, said, “The hiring of Daniel O’Day was a positive incremental step which helps make shares of Gilead Sciences more ownable for investors.” He gave GILD stock a $95 price target, suggesting a 53% upside.

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