BofA restarts coverage of 11 large-cap biopharmas

BofA has reinstated coverage of 11 large-cap pharmaceutical and biotech stocks, with Eli Lilly (NYSE:LLY), Gilead (NASDAQ:GILD) and Merck (NYSE:MRK) receiving buy ratings.

BofA said Lilly (LLY) should be a core holding due to its “outsized, durable long-term growth.” The bank noted that Lilly (LLY) and obesity drug rival Novo Nordisk (NVO) both have “many protective moats around them” and set a price objective of $997 for the stock.

Gilead (GILD) was deemed “a relatively quiet stock” with “above-average durable long-term growth – at a below-average P/E multiple.” BoA’s price objective for Gilead (GILD) is $109.

The investment bank called Merck (MRK) “arguably the best GARP name in the category,” adding that its P/E multiple was “too low for the long-term growth MRK offers.” The bank’s price objective for Merck (MRK) is $121.

Meanwhile, AbbVie (NYSE:ABBV), Biogen (NASDAQ:BIIB), Bristol Myers Squibb (NYSE:BMY), Johnson & Johnson (NYSE:JNJ) and Pfizer (NYSE:PFE) were all rated neutral. The bank set prices objectives of $191 for AbbVie (ABBV), $178 for Biogen (BIIB), $63 for Bristol Myers (BMY), $166 for J&J (JNJ) and $29 for Pfizer (PFE).

BofA called AbbVie (ABBV) another “quiet” stock with durable long-term growth and above-average valuation. The bank said Biogen (BIIB) appeared to have limited downside and was “worth tracking as Leqembi launch picks up.”

For Bristol Meyers (BMY), BofA said further upside would be difficult given the stock’s recent run-up. J&J (JNJ) was also seen with limited upside at current valuation, although a resolution to its talc litigation in 2025 “would help.”

The bank said that uncertainty over Pfizer’s (PFE) Covid revenue and base business outlook “explains the very low P/E, but keeps it there.” It added that the company’s dividend yield of 6.6% “likely puts in a floor.”

BofA was bearish on Amgen (NASDAQ:AMGN), Moderna (NASDAQ:MRNA) and Regeneron (NASDAQ:REGN), rating all three underperform. Price objectives were $256 for Amgen (AMGN), $41 for Moderna (MRNA) and $565 for Regeneron (REGN).

The bank noted that Amgen’s (AMGN) “obesity premium was coming out the stock—but we think there might be more room to go.” It also pointed out that the company was facing several patent expirations over the next decade.

For Moderna (MRNA), BofA noted “it was a tough time to be a vaccine company,” even if Robert F. Kennedy Jr. doesn’t become head of the Department of Health and Human Services. It added that it had “mixed views” on the company’s pipeline.

While BofA called Regeneron (REGN) a “high-quality company,” it said it believes the company’s Eylea franchise will erode quicker and deeper than expected.