In this article we discuss the 5 best pharma stocks to buy now. If you want to read our detailed analysis of the pharma industry, go directly to 10 Best Pharma Stocks to Buy Now.
5. Eli Lilly and Company (NYSE: LLY)
Number of Hedge Fund Holders: 50
Eli Lilly is one of the best pharma stocks to buy now. The company, which was the first to mass-produce the polio vaccine, is behind various famous drugs including Humulin (insulin medication), Humalog (insulin lispro) and Basaglar. It also makes Prozac, Dolophine, Cymbalta and Zyprexa. The company’s recently revealed patient-reported outcomes for investigational use of Verzenio for high-risk early breast cancer show positive results. The company’s Alzheimer’s treatment donanemab showed mixed results in a latest trial. Jefferies said in a report that LLY’s positive Phase II donanemab study adds another positive data point to Abeta antibodies.
According to our database, the number of LLY’s long hedge funds positions decreased at the end of the fourth quarter of 2020. There were 50 hedge funds that hold a position in LLY compared to 60 funds in the third quarter. The biggest stakeholder of the company is Fisher Asset Management, with 5.04 million shares, worth $850.6 million.
4. Pfizer Inc. (NYSE: PFE)
Number of Hedge Fund Holders: 63
Pfizer is getting a lot of attention since the company launched COVID-19 vaccine. The company is now moving forwarding with Phase 1 trials of its oral pill treatment for COVID-19.
However, Pfizer has much more than just the coronavirus vaccines. Earlier in March, Goldman Sachs named Pfizer one of its top pharma picks for 2021, as the firm believes big pharma companies with huge piles of cash are set to drive M&A activity in 2021.
Diamond Hill Capital currently owns 9.2 million shares of PFE, worth $337.9 million. Pfizer occupies 1.59% of Diamond Hill Capital’s overall equity.
3. Abbott Laboratories (NYSE: ABT)
Number of Hedge Fund Holders: 64
Abbott ranks 3rd on the list of 10 best pharma stocks to buy now. Apart from a strong pipeline of products, the company is set to benefit from the COVID-19 testing boom all over the world. Abbott offers eight types of COVID-19 tests. The company gave full-year 2021 profit above analysts’ estimates in January. In the fourth quarter of 2020 alone, the company sold over 300 million test kits, raking in a revenue of $2.4 billion. The stock is up 66% over the last 12 months.
As of the end of the fourth quarter, 64 hedge funds in Insider Monkey’s database of 887 funds held stakes in ABT, compared to 62 funds in the third quarter. GQG Partners is the biggest stakeholder in the company, with 14.3 million shares, worth $1.6 billion.
Polen Global Growth, in their Q4 2020 investor letter, said that they added their position in Abbott Laboratories (NYSE: ABT) because of the company’s increasing sales of COVID tests. Here is what Polen Global Growth has to say about Abbott Laboratories in their investor letter:
“During the quarter, we added our position in Abbott Laboratories. We felt it was prudent to reallocate capital to faster-growing companies with greater business momentum like Abbott. Abbott Labs was in a favorable position to grow durably before COVID-19 swept across the world. The company pivoted rapidly to help societies manage the disease’s spread by creating accurate and rapid tests. Abbott has now sold over 100 million COVID tests globally and is building manufacturing capacity to meet further demand for testing around the world. In the company’s most recent quarter alone, it generated $880 million in COVID-related testing sales, likely influenced by the release of the company’s BinaxNOW COVID-19 rapid test, which can detect COVID in just 15 minutes with no instrumentation required (this is Abbott’s 6th COVID-19 test).
Abbott met the moment when COVID-19 became a global pandemic by going into overdrive to manufacture millions of tests
per month. These capabilities have become an accelerant to company revenue growth.With Abbott’s other business segments potentially returning to pre-COVID-19 growth in the near future, we believe the company is even better positioned than before the global pandemic to generate double-digit EPS growth during the next five years. It is difficult to know how long COVID testing will remain a meaningful driver of growth or how long the world will be dealing with the disease. That said, it has allowed Abbott to meaningfully grow its installed base of testing equipment and systems, which are capable of testing and detecting a whole host of many other diseases. Given the combination of these variables, we raised the position to an above-average weight. It is currently one of our largest positions within the Portfolio.”
2. AbbVie Inc. (NYSE: ABBV)
Number of Hedge Fund Holders: 83
AbbVie is one of the best pharma stocks to buy now. The stock is up 40% over the last 12 months. Earlier this year, the company won FDA approval for HUMIRA (adalimumab) for the treatment of moderately to severely active ulcerative colitis in pediatric patients. With over 5% dividend yield, AbbVie is also a solid option for income investors. The company has a strong track record in terms of dividend growth. The company’s revenue jumped 60% in the fourth quarter of 2020 while the management gave upbeat guidance for 2021.
Warren Buffett’s Berkshire Hathaway is one of the 83 hedge funds tracked by Insider Monkey having stakes in ABBV at the end of the fourth quarter. The fund owns over 25.5 million shares of the company.
1. Bristol-Myers Squibb Company (NYSE: BMY)
Number of Hedge Fund Holders: 131
Bristol Myers ranks 1st in our list of 10 best pharma stocks to buy now. The company makes treatments for HIV, heart diseases, cancer, diabetes, arthritis and psychiatric disorders. The stock is up 19% over the last 12 months. Warren Buffett’s Berkshire loaded up on BMY in the fourth quarter. The fund now owns $2 million worth of the company’s shares. With a dividend yield of 3.15%, BMY has increased its dividend for the last 14 consecutive years.
The company is also getting the attention of the smart money, as 131 hedge funds tracked by Insider Monkey reported owning stakes in the company at the end of the fourth quarter, up from 124 funds a quarter earlier. Our calculations show that Bristol-Myers Squibb Company ranks 13th in our list of the 30 Most Popular Stocks Among Hedge Funds.
You can also take a peek at Billionaire Ken Griffin’s Top 10 Stock Picks and Billionaire Nicholas Pritzker’s Tao Capital’s Best Stock Ideas.
