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The Zacks Analyst Blog Highlights: Johnson and Johnson, AbbVie, Roche's, AstraZeneca and Novo-Nordisk A/S

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For Immediate Release

Chicago, IL – Jan 02, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Johnson and Johnson, Inc. (JNJ - Free Report) , AbbVie Inc. (ABBV - Free Report) , Roche's (RHHBY - Free Report) , AstraZeneca plc (AZN - Free Report) and Novo-Nordisk A/S (NVO - Free Report) .

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Here are highlights from Friday’s Analyst Blog:

4 Large-Cap Pharma Stocks that Outperformed the Market in 2018

The pharma/biotech industry was plagued by drug pricing issues last year. However, it bounced back and made a considerable headway this year, courtesy of a slew of FDA approvals. Particularly, large-cap players in the industry raked in stellar returns, up 16.5%, not to forget that the same space posted a decline of 5.2% in the year earlier.

Upbeat quarterly results, rise in demand on new product sales, successful innovation and product line expansion, strong clinical study results as well as a continued strong performance of legacy products propelled the large-cap drug sector to new highs this year. Moreover, these encouraging factors are expected to drive the sector’s growth in 2018.

Meanwhile, jubilant Republicans passed the tax overhaul bill for the first time in 30 years. The bill slashes corporate tax rates from 35% to 21%. Such tax reduction is likely to further boost profit margins of these companies in the large-cap pharma sector with more cash left in hand. This, in turn can also be used for striking strategic deals. It is to be remembered that mergers/acquisition activities lagged in the previous year.

Notably, the Large Cap Pharma sub-industry carries a Zacks Industry Rank of #104, placing it among the top 39% of the 265 plus Zacks industries. Our backtesting shows that the top 50% of the Zacks ranked industries outperforms the bottom half by a factor of more than two to one.

Banking on such positive trends, investing in sound large-cap pharma stocks seems judicious. To top it, such stocks are fundamentally lucrative and ensure a steady stream of cash inflows. We have hence selected four such companies that have outperformed the broader S&P 500 index this year and are also poised to continue their winning streak heading into the New Year.

Johnson and Johnson, Inc.

The New Jersey-based biotech giant Johnson and Johnson has outperformed the S&P 500 this year. Shares of the company have rallied 22% while the broader market has increased 20.2%. The stock’s earnings are further expected to grow 7.8% in 2018.

The company’s track record of product launches has been impressive this year. It is making a fast progress toward achieving its goal of more than 10 approvals for new blockbuster products by 2021. Moreover, the company is targeting more than 50 line extensions of both its existing as well as new drugs. In October, J&J received an FDA approval for two line extensions of Simponi Aria for psoriatic arthritis and ankylosing spondylitis.

Additionally, contribution from recent acquisitions, mainly Actelion, generated positive sentiments among investors. 

Continuous developments have led to a consistent rise in shares. The company carries a Zacks Rank #3 (Hold).

AbbVie Inc.

This Illinois-based biopharmaceutical company also outperformed the S&P 500 so far this year. Shares of the company have surged 56.1% during the period. This rally price movement was supported by a series of positive news in the past few months.

AbbVie presented promising data from several pivotal studies, gained key regulatory approvals and settled its Humira patent disputes with Amgen. The stock’s earnings are further estimated to increase 18.2% in the next year.

AbbVie’s eight-week, pan-genotypic, ribavirin-free, once-daily HCV treatment, Mavyret/Maviret, secured approval in the United States, EU and Canada in the third quarter of 2017. Additionally, in August, AbbVie clinched a nod from the regulatory agency for Imbruvica to address its sixth indication among others.

Meanwhile, the company announced positive data from the phase III MURANO study of Venclexta plus Roche's Rituxan in relapse/refractory CLL in September. Later in October too, AbbVie announced that three pivotal head-to-head phase III studies, evaluating risankizumab versus Johnson & Johnson’s Stelara and Humira, for treatment of moderate-to-severe chronic plaque psoriasis, met all co-primary and secondary endpoints.

Several pivotal data readouts and regulatory milestones are expected in 2018. Besides, all the above-mentioned factors bode well for the stock. The company is a Zacks #3 Ranked player.

AstraZeneca plc

The UK-based biopharmaceutical giant outperformed the S&P 500 this year. The company’s shares increased 24.8% during the period. It has announced quite a few progressions on the regulatory and pipeline front this year, driving a steady appreciation in share price.

AstraZeneca also has a promising late-stage pipeline including immuno-oncology candidates.  Imfinzi, approved for bladder cancer and currently being evaluated for multiple cancers, is a key drug in the pipeline. The company has about 11 new molecular entities in a phase III trial or under a regulatory review apart from several lifecycle management programs.

Last month, Fasenra/benralizumab has been approved in the United States for treatment of asthma. It is under review in the EU for chronic obstructive pulmonary disease (COPD). This month, FDA has accepted its application for the label expansion of its marketed drug, Tagrisso (osimertinib), for the first-line treatment of adult patients with metastatic NSCLC. Additionally, the regulatory filing for Tagrisso’s label expansion is accepted in the EU in November for a similar indication.

In December, AstraZeneca also announced positive top-line data from a phase IV study, evaluating its marketed drug, Tudorza Pressair, for an expanded indication (COPD with cardiovascular risk factors).

The company carries a Zacks Rank of 3.

Novo-Nordisk A/S

Novo-Nordisk has been in news for the past few months based on the encouraging progress of its diabetes pipeline. Constant improvements and corresponding approvals have led to a regular surge in shares. The company is a #3 Ranked player. Shares of the company have soared 49.9% so far this year, outpacing the S&P 500 index. The stock’s earnings are further projected to rise 5.3% in 2018.

In October, the Endocrinologic and Metabolic Drugs Advisory Committee of the FDA voted in the 16-0 ratio in favor of the approval of semaglutide to improve glycaemic control in adults with type II diabetes. Meanwhile, late last year, the company also filed for semaglutide in the EU for the given indication. Moreover, in September, the FDA approved Fiasp (fast-acting insulin aspart) for treating adults with diabetes.

In August, the FDA approved a label expansion for the company’s diabetes drug, Victoza. The drug is now approved to reduce the risk of major adverse cardiovascular events in adults with type II diabetes. In the same month, the label expansion for the lessened risk of severe hypoglycaemia with Tresiba was endorsed by Committee for Medicinal Products for Human Use in the EU. Tresiba’s label update should boost the company’s sales.

Conclusion

A series of data readouts plus upsides on both regulatory and pipeline fronts for the above stocks this year are likely to help continue the bullish run next year and surpass the broader market as well.

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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

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