< The 2016 All-Europe Research Team
Richard Vosser & team
J.P. Morgan Cazenove
First-place appearances: 2
Total appearances: 11
Team debut: 2006
Richard Vosser guides his J.P. Morgan Cazenove crew from runner-up to second place on this roster and (with newcomer James Gordon) to No. 1 on the Biotechnology lineup, which is again separate after having been combined with this category for the past two years. Working out of London and Mumbai, the six teammates report on seven European pharmaceuticals companies. The sector should maintain its forward multiple through 2016, leading to a 10 percent upside, says Vosser. “Pipeline news flow will be the largest determinant of performance in 2016, hence our top picks reflect the stocks with the most pipeline optionality, and where we see positive risk reward around the data points.” Investors value the group’s accessibility and focus on fundamentals research. One fund manager offers that the analysts have “done a good job assessing most investment controversies in European pharmaceuticals — and Novo was a correct call.” Denmark-based Novo Nordisk, a global front-runner in diabetes care, has been among the researchers’ favorite names since they boosted their rating on the stock from underweight to overweight two years ago. The company offers “positive risk reward from pipeline news flow for Tresiba and Victoza [for the treatment of type 2 diabetes] in the first quarter of 2016 and supportive long-term guidance,” the 38-year-old captain reports. More broadly, he and his associates expect “long-term superior sustainable growth rates, driven by the diabetes franchise, to continue to lead to Novo maintaining its premium to the sector.” Their price objective for its stock is 450 Danish kroner. As of mid-January it was up 53.6 percent over the life of their overweight call, trading at Dkr361 and outpacing its European peers by 49.7 percentage points. During the trailing 12-month period, it rose 28.7 percent, against the regional sector’s decline of 4.7 percent. Similarly, the researchers point to the attractive prospects for Novartis’s new heart failure medication Entresto as a reason to favor the Swiss behemoth’s shares. They anticipate a “restoration of confidence in Entresto’s potential to drive a rerating and see significant pipeline news flow in 2016,” Vosser reports. His group pegs Novartis at Sf110, which indicates a premium of 37.1 percent from its trading value in mid-January.
