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JPMorgan told investors in a note Monday that Eli Lilly & Co. (NYSE:LLY) shares are its “top pick” among U.S. large-cap biopharma names after second-quarter earnings.
“While orforglipron ph3 obesity weight loss data fell just short of expectations, we continue to see a clear role for the product in the market while LLY’s core injectable incretin franchise remains optimally positioned,” analysts wrote.
They added that “following last week’s selling, LLY shares are trading at only ~29x/~21x conservative 2025/2026 EPS estimates.”
The bank said second-quarter results for the sector were “generally solid with most companies raising guidance,” highlighting particularly strong results from AbbVie (NYSE:ABBV), Johnson & Johnson (NYSE:JNJ), Gilead Sciences (NASDAQ:GILD), Regeneron (NASDAQ:REGN) and Eli Lilly.
Despite these beats, JPMorgan said U.S. pharma stocks were not immune to market volatility, with macroeconomic and regulatory concerns, especially around Most Favored Nations reference pricing, impacting moves.
However, analysts believe “this overhang will likely persist in the near term” but is “well reflected in valuation” with “low probability of broad implementation.”
Beyond Lilly, JPMorgan named Gilead, citing its “well-performing HIV portfolio” and a “strong start for Yeztugo in PrEP,” as well as Regeneron, an “out of favor name with improving catalyst flow throughout the year,” and AbbVie, a “clean beat/raise story,” as additional opportunities.
The bank sees sentiment in the group at around “3/4 out of 10,” with AbbVie and Gilead now leading on positive sentiment.
Valuations remain “near all-time lows compared to the S&P500 (~45-50% discount ex-LLY),” and JPMorgan expects sentiment to improve heading into a “catalyst-rich 2H25/1H26.”