SunTrust Names Eli Lilly, Merck, Bristol-Myers as 'Favorite' Pharma Firms

In a note out Monday, SunTrust said it expects biotech to continue to outperform in 2015, led by innovation and new product cycles. Given a choice, SunTrust singled out Bristol-Myers Squibb Co BMY, Eli Lilly and Co LLY and Merck & Co, Inc. MRK. Alternatively, the analysts recommended shying away from Pfizer Inc. PFE. Among specialty pharma, SunTrust picks Shire PLC SHPG.

SunTrust expects that macro factors will continue to dictate biotech's outperformance relative to the S&P 500. In addition to innovation-led growth, SunTrust outlines four additional factors that will lead to outperformance: (1) the five-year growth rate is attractive; (2) pharma stocks are under-owned relative to the S&P; (3) good anticipated performance in a rising interest rate environment; and (4) continued M&A speculation.

This week, SunTrust also points to some key meetings and conferences that investors should watch:

American Academy of Dermatology – March 20-24

European Association of Urology – March 20-24

European Atherosclerosis Society – March 22-25

ACGM Annual Clinical Genetics Meeting – March 24-28

National Kidney Foundation Spring Clinical Meeting – March 25-29

Superbugs and Superdrugs – March 25-26

The SPDR S&P Biotech ETF XBI is up 24 percent this year, compared with a gain of 2.5 percent in the S&P 500. Over the past year, biotech gained 50 percent compared with 13 percent gains in the S&P.