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Bristol-Myers Tanks, Buy These Two Large Cap Pharma Stocks Instead

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Several large cap pharmaceutical stocks are making waves on Friday as shares of Bristol-Myers Squibb (BMY - Free Report) tanked more than 17% following the news that its cancer drug failed to meet targets in a late-stage study.

Bristol-Myers was testing a drug called Opdivo, which has already been approved to treat some forms of cancer, to see if it would be successful in fighting advanced non-small cell lung cancer. Unfortunately, Opdivo failed to meet its primary endpoint of improvement in progression-free survival.

On the other hand, shares of Bristol-Myers rival Merck (MRK - Free Report) are surging more than 10% because its drug Keytruda, which competes with Opdivo, was more successful in a similar trial recently. Bristol-Myers did open its study to a wider patient population, exposing itself to more risk, but it looks like investors are willing to call this a win for Merck right now.

(Also Read: Shares of Bristol-Myers Falling After Failed Study, While Its Rival Is Surging)

With Bristol-Myers being such a massive entity in the pharmaceutical industry, today’s news is incredibly important for the market. The stock is now down about 8% on the year, and it makes sense that investors may be looking a different direction.

Luckily, the Zacks Rank indicates that a couple of other stocks in the large cap pharmaceutical industry might be better options right now. The first one we’ll look at is Johnson & Johnson (JNJ - Free Report) , which is currently a Zacks Rank #2 (Buy).

In comparison to an industry that has remained relatively flat in 2016, shares of Johnson & Johnson have gained a little over 20% year to date. The company has a ridiculous track record of beating earnings expectations, consistently outperforming the Zacks Consensus Estimate for nearly a decade. Johnson & Johnson has also seen ten positive estimate revisions for its full-year earnings within the past 30 days.

Another stock to note right now is Eli Lilly and Company (LLY - Free Report) , another Zacks Rank #2 (Buy). While Eli Lily and Co. has struggled throughout the year, shares have bounced back, gaining nearly 8.5% over the last 12 weeks. In its most recent earnings report, the company outperformed the Zacks Consensus Estimate by a penny, and analysts have been busy revising estimates for the remainder of the year.

In the past 30 days, we’ve seen three positive estimate revisions for the company’s current-quarter earnings versus just one negative revision. In that same timeframe, we’ve seen four positive revisions for Eli Lilly and Co.’s full-year earnings. In just the past week, the Zacks Consensus Estimate for the company’s earnings has gone up by a penny.

Despite the negative news from Bristol-Myers today, pharma investors can see that estimate revision activity points to other stocks right now.

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