Bristol Myers Squibb Co. (NBMY), Eli Lilly & Co. (LLY), Johnson & Johnson (JNJ): Six Big Pharma Stocks With Lower Credit Risk Than U.S. Treasuries: Part I

Despite these headwinds, Eli Lilly & Co. (NYSE:LLY) is expected to produce EPS growth of between 12% and 16% this year. The company has some potential blockbusters in its pipeline, including dulaglatuide, a new diabetes treatment in the late-stage trial and Ixekizumab, a psoriasis treatment, ramucirumab, a new breast-cancer drug, and Alzheimer’s drug solanezumab. Still, analysts see flat EPS growth for Eli Lilly & Co. (NYSE:LLY) over the next five years on average. Eli Lilly & Co. (NYSE:LLY) is trading at 15.6x forward earnings. Last quarter, Jim Simons held nearly $400 million in this stock.

The best of the rest

Johnson & Johnson (NYSE:JNJ) pays the lowest dividend of the featured six pharmaceutical majors. Its yield is only 20 basis points below the average over the past five years. The company has raised dividends for 50 consecutive years. Johnson & Johnson (NYSE:JNJ) lost patent protections on Concerta, Levaquin and Invega in 2011 and 2012, with Aciphex, a heartburn drug, scheduled to lose its exclusivity this year. Velcade and Remicade, Johnson & Johnson (NYSE:JNJ)’s blockbuster drugs for multiple myeloma and autoimmune diseases, respectively, will lose patent protection in 2014.

Despite the patent cliff, the company is expected to grow its EPS at a CAGR of 6.6%, among the highest in the industry. The company’s revenue losses due to patent expirations will be mitigated by sales of new drugs, such as Zytiga for prostrate cancer, Invokana (canagliflozin) for type-2 diabetes, and Invega for schizophrenia. The company has fortress balance sheet and boast a strong sales potential in emerging markets. Johnson & Johnson (NYSE:JNJ) is priced at 15.6x forward earnings. Last quarter, it was popular with value investors Ken Fisher and Donald Yacktman.

To be continued

The three stocks discussed above are solid income-oriented plays moving forward, and their attractive risk profiles adds to the allure. Be on the lookout for part two, which discusses the remaining three stocks in this group.

Disclosure: none