May 11, 2020 7:24 am
We are only in May, but 2020 is already one of the most incredible years in stock market history. Despite the strong push off the bottom in March, money markets are stuffed with trillions in cash and investors remain very bearish. Those looking for stock ideas should stay with sectors that are leading the way.
One of Wall Street’s most respected lists of stock picks is the Goldman Sachs Conviction List. These are the firm’s top ideas for high net worth and institutional accounts, and they are spread across 10 sectors. We screened the list looking for companies in the health care sector, which has been humming along in what has been a turbulent year, to say the least.
We found five outstanding companies that make sense for long-term growth investors looking to add or increase exposure to health care, particularly pharmaceuticals and biotechnology. Remember that no single analyst report should be used as a sole basis for any buying or selling decision.
This a Wall Street favorite and a solid biopharma play. BioMarin Pharmaceuticals Inc. (NASDAQ: BMRN) develops and commercializes innovative biopharmaceuticals for serious diseases and medical conditions. Its product portfolio comprises five approved products and multiple clinical and preclinical product candidates.
Over the past decade, BioMarin has become one of the top orphan drug companies, and it looks poised to stay there. Roche recently has been mentioned as a company that could be looking at BioMarin. Roche is focused on oncology drugs and invests heavily in early-stage molecules.
The consensus earnings forecast for 2020 has been scaled down by a penny per share. However, the full-year 2021 estimate has been lifted to $1.20 per share from the previously forecast $1.13.
The Goldman Sachs price objective is $165, while the Wall Street consensus target price is just $117.18. BioMarin Pharmaceuticals stock closed trading on Friday at $95.20 a share, up 3.5% on the day.
This company also has solid upside potential, and it is a great pick for conservative accounts. Eli Lilly and Co. (NYSE: LLY) is a global health care company with numerous core products in a number of primary-care pharmaceutical markets. The company generates revenues from its pharmaceutical product and animal health segments.
The product portfolio includes Zyprexa (for schizophrenia and bipolar disorder), Gemzar (pancreatic cancer), Evista (osteoporosis), Cymbalta (depression), Cialis (erectile dysfunction), Strattera (attention deficit hyperactivity disorder), Erbitux (cancer) and Alimta (chemotherapy). Eli Lilly also has a strong presence in the diabetes market.
The company posted stellar first-quarter results, with revenue of $5.9 billion, up 15% year over year. Several of the pharma giant’s drugs performed particularly well during the quarter. For instance, sales of the diabetes medication Trulicity hit $1.2 billion, or 40% higher than in the year-ago period. And Eli Lilly’s plaque psoriasis treatment Taltz recorded revenue of $443.5 million, a whopping 76% year-over-year increase.
Shareholders receive a 1.93% dividend. Goldman Sachs has a $186 price objective, and the consensus target is $156. Eli Lilly stock closed at $153.51 on Friday.
This top mid-cap is rumored to be in the sights of a larger biotech company. Incyte Corp. (NASDAQ: INCY) has a current validated approach in hematology-oncology, and there’s reason to believe the three wholly owned clinical-stage assets the company has could drive several billion in revenue, something important for an acquiring company looking to acquire assets.