The Zacks Analyst Blog Highlights: Eli Lilly & Company, AstraZeneca, AbbVie and Bristol-Myers Squibb
For immediate release
Chicago, IL - June 19, 2020 - Zacks.com announces the list of stocks on the analysts blog. Every day, Zacks Equity Research analysts discuss the latest news and events affecting stocks and the financial markets. Recent stocks featured on the blog include: Eli Lilly & Company LLY, AstraZeneca AZN, AbbVie ABBV and Bristol-Myers Squibb Co. BMY.
Here are some highlights from Thursday's analyst blog:
Buy these 4 big drug companies to keep coronavirus woes at bay
The drug / biotech sector is currently in the spotlight, and investors hope that companies will develop a cure or vaccine for COVID-19 that has brought the world to a standstill. Several drug / biotech companies are working on the production of antibodies, drugs and vaccines to fight the disease.
The economic damage caused by the locks caused by coronaviruses has made it all the more important for the pharmaceutical and biotech sectors to find a treatment / vaccine for COVID-19 so that the situation can normalize again.
The pandemic has also injured the drug / biotech sector. While consumer goods and drug stocks in the first quarter benefited drug manufacturers' sales, the second quarter is expected to be more affected by first-quarter sales. However, almost all companies are optimistic that they will recover in the second half of the year as trends in patient visits to doctors, vaccinations and elective surgery are expected to return to normal levels.
Overall, the basics of the pharmaceutical / biotech sector are largely intact despite the short-term disruptions. Demand-driven sales growth for new products, successful innovation and product line expansion in key therapeutic areas, strong clinical trial results, growing demand for medicines, especially for rare diseases, increased M&A activities and appropriate use of cash should be required solid foundation as soon as the pandemic-related uncertainty subsides. Frequent FDA approvals have also played an important role in increasing the sector this year. The FDA has already approved 24 new drugs in less than six months of the year and several product line extensions for marketed drugs.
The sector faces headwinds, such as government control of high drug prices, pricing and competitive pressures, generic competition for blockbuster treatments, and most importantly, major pipeline setbacks. However, we believe that the drug and biotech sector is better positioned than retail, restaurants, games, transportation and travel.
In the meantime, the risks of an ongoing global recession have increased as coronavirus cases are increasing worldwide. The pharmaceutical and biotech sector is considered a defensive area, as it is hardly affected by a recession. This is because people will continue to buy medication even in difficult times.
The Zacks Large Cap Pharmaceuticals industry, which includes some of the largest pharmaceutical manufacturers in the world, has been down 2.5% so far this year compared to the 3% decline in the Zacks S & P 500.
In addition, the Zacks Large Cap Pharmaceuticals industry currently has the Zacks Industry Rank # 15, making it one of the top 6% of more than 250 Zacks industries.
In this scenario, investing in large pharmaceutical manufacturers is a prudent step because they control a large part of the industry. Here we highlighted four stocks that may prove to be good purchases.
Eli Lilly & Company
Lilly is working hard to make drugs / antibodies to treat COVID-19. Lilly has two antibody candidates in Phase I studies to treat COVID-19. A phase III study has also started to evaluate the JAK inhibitor olumiant (baricitinib) as a potential treatment for hospital patients diagnosed with COVID-19.
Lilly is making significant progress in the pipeline with several positive late-stage data readings and several regulatory updates scheduled for 2020. Lilly expects to launch two drugs, Retevmo / Selpercatinib for RET-altered cancers and Lyumjev / Ultra-Rapid Lisprofor Type I and Type II Diabetes in 2020. While Retevmo was approved in the US in May and is pending review in the EU, Lyumjev is approved in both the EU and the United States.
In 2020, Lillys expects its revenue to be driven by higher demand for key medicines such as Trulicity, Jardiance, Taltz, Verzenio, Basaglar, Emgality, and the newly launched Baqsimi and Reyvow. These drugs are also being examined for additional indications / label extensions that could increase sales in the coming quarters. Lilly also regularly adds promising pipeline assets through business development deals.
The shares have risen by 21.7% so far this year. Lilly currently has a Zacks Rank 1 (Strong Buy). The full list of today's Zacks # 1 Rank stocks can be found here.
Earnings estimates for 2020 and 2021 have increased from $ 6.77 per share to $ 6.81 and from $ 7.92 per share to $ 8.00 over the past 60 days.
AstraZeneca was recently in the news for its agreement with Oxford University on the worldwide development and distribution of Oxford's potential recombinant adenovirus vaccine, now known as AZD1222, to prevent COVID-19. It is currently being evaluated in a phase II / III study, the data of which are expected to be published shortly. If the data is successful, late stage studies are expected to begin with 30,000 participants in a number of countries. StraZeneca has signed several supply contracts worldwide that, if successfully developed, will require the manufacture of 2 billion doses of the vaccine.
The newer drugs from AstraZeneca, mainly the cancer drugs Lynparza, Tagrisso and Imfinzi, are expected to further increase revenues in 2020. The pipeline is strong and contains numerous catalysts. Several market launches are underway in each of the therapeutic areas - oncology; Cardiovascular, kidney and metabolism; and airways. AstraZeneca participates in external acquisitions and strategic collaborations to strengthen its pipeline while investing in high growth geographic areas such as China. Efforts to reduce costs should increase earnings
This number 2 in the ranking (Buy) has risen by 8.1% so far this year. The Zacks consensus estimate for 2020 and 2021 has increased from $ 2.01 to $ 2.03 per share and from $ 2.57 to $ 2.61 over the past 60 days.
AbbVie currently has a Zacks rank of 2. The shares have risen by 8.1% so far this year. Earnings estimates for 2020 and 2021 have risen 7.4% and 6.6%, respectively, over the past 60 days.
Although AbbVies is the most important drug, Humira records a decline in sales in international markets due to the biosimilar competition. However, there are still strong demand trends in the United States. AbbVie has successfully expanded the labels of its cancer drugs Imbruvica and Venclexta. It also has an impressive late-stage pipeline. Two new drugs with significant potential, Skyrizi (risankizumab) and Rinvoq, were approved in 2019. Skyrizi and Rinvoq got off to a good start, and AbbVie expects the combined sales of these two drugs to total around $ 1.9 billion in 2020.
The Allergan acquisition, which was completed in May, should diversify AbbVie's sales base and accelerate the non-Humira business. AbbVie anticipates that more than 20 new products or product line expansions for marketed drugs will be launched before the U.S. Humira biosimilars competition begins in 2023.
Bristol-Myers Squibb Co.
Bristol-Myers has a Zacks rank of 2. The blockbuster immuno-oncology drug from Bristol-Myers, Opdivo and the blood thinner Eliquis are driving sales growth. The expansion of the label to include additional indications will further increase the return on sales. Empliciti and Sprycel also perform well when expanding labels. The acquisition of Celgene in 2019 strengthened Revlimid's oncology portfolio. The acquisition also strengthened the company's pipeline with encouraging oncology candidates.
Earnings estimates for 2020 and 2021 have increased 0.7% and 0.4%, respectively, over the past 60 days.
Below is a graph that shows the price performance of the four stocks this year:
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Past performance is no guarantee of future results. The loss potential is associated with every investment. This material is provided for informational purposes only, and nothing in this document constitutes investment, legal, accounting, or tax advice or a recommendation to buy, sell, or hold a security. No recommendation or advice will be given as to whether an investment for you is suitable for certain investors. It is not believed that investments in securities, companies, sectors or markets that have been identified and described have been or will be profitable. All information is current as of the date of this publication and is subject to change without notice. Any views or opinions expressed may not reflect those of the entire company. Zacks Investment Research has no investment banking, market making or asset management activities for securities. These returns come from hypothetical portfolios consisting of stocks with zacks rank = 1 and rebalanced monthly without transaction costs. These are not the returns on actual equity portfolios. The S & P 500 is an unmanaged index. At https://www.zacks.com/performance you will find information on the performance figures shown in this press release.
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