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3 Biotechs Atlantic Equities Loves And 1 It's Avoiding

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In three separate reports issued Friday, Atlantic Equities analyst Steve Chesney issued Overweight ratings on shares of Eli Lilly and Co (NYSE: LLY), Amgen, Inc. (NASDAQ: AMGN) and Pfizer Inc. (NYSE: PFE).

The expert also released an Underweight rating on shares of Bristol-Myers Squibb Co (NYSE: BMY).

So, let’s take a look at these three biotechs that Atlantic Equities loves, and the one it is avoiding.


Capital allocation including the proposed acquisition of Allergan plc (NYSE: AGN) and the potential break up of the company still support the upside case for Pfizer, the research note explained.

Taking into account the stability for Established Pharma following the Hospira, Inc. (NYSE: HSP) purchase and the remarkable growth outlook for the Innovative business driven by strong product launches for Ibrance and Prevnar, the experts see “the ‘as is’ business on a standalone basis as sufficiently attractive to warrant an Overweight rating” and $39 price target.


Atlantic Equities initiated coverage of Amgen with an Overweight recommendation and $202 price target, arguing that new product releases and “pipeline opportunities offset biosimilar headwinds on the top-line.” Moreover, they continued, the firm anticipates c.4 percent top-line growth to 2020.

“Self-help on the cost lines also drive best-in-class margin expansion among our biotech coverage,” the experts added. Finally, they noted that key data catalysts coming next year -- including romo in osteoporosis and Repatha CV outcomes -- create the potential for consensus upward revisions.

Eli Lilly

Eli Lilly was also initiated with an Overweight rating and $100 price target. The company’s pipeline offers plenty of leverage on the back of base business stability supported by strategic moves in the diabetes and animal health segments.

The company’s pipeline “combines breadth (7 key late-stage opportunities) and depth in key therapeutic areas (>4 molecules in Alzheimer's),” the analysts expounded. “Recent clinical evidence supports optimism for sola in Alzheimer's, a potential $12bn opportunity that drives a $118/share blue-sky scenario if data in late 2016/2017 is positive.”

Bristol-Myers Squibb

Finally, there’s Bristol-Myers Squibb, the ugly duckling – rated Underweight with a $57 price target that implies plenty of downside.

Since early 2011, shares of Bristol-Myers gained roughly 160 percent (versus 100 percent for its pharma sector peers), mainly driven by continued success in immuno oncology (IO).

“While there is an argument to be made for BMY's superior growth dynamics to justify the near-term multiple (c.22X vs sector 16X '17), on a PEG basis BMY trades at a 30% premium to other growth biopharma (CELG, BIIB, ABBV, LLY) and a 21% premium to S&P 500 stocks with similar growth dynamics,” the experts concluded, justifying their Underweight rating.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

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