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JPMorgan Bullish on Biotech: 3 Top Picks to Buy Now

We have noted recently that large pharmaceuticals and biotech have been hammered, and now may be offering outstanding total return potential. While the larger pharmaceutical stocks have done better recently, the biotech sector has continued to lag, despite the fact that some of the mega-cap companies are trading cheaper than big pharmaceutical stocks.

A new JPMorgan research report says it time to buy the health care sector and sell consumer staples, which have run hard this year. The report notes what we have stressed recently, that while drug pricing rhetoric is an overhang, and may remain so through the election, big reform on pricing is unlikely.

Three top picks make the grade, and all are rated Overweight at JPMorgan.


This is one of JPMorgan’s top biotech picks for 2016. Celgene Corp. (NASDAQ: CELG) has an outstanding partnered pipeline, which most think is low risk and has the potential to yield several blockbuster drugs. Certain Wall Street analysts also think the company can grow earnings 15% on a compounded annual growth rate basis going forward. Otezla, which treats psoriasis and psoriatic arthritis, had achieved considerable prescriptions among physicians, but the scripts have slowed after a solid launch, showing the importance for sales outside of the United States.

Celgene’s blockbuster blood cancer drug Revlimid continues to dominate. Pomalyst sales also continue to be solid. Cancer drug...