< The 2015 All-Europe Research Team
Sachin Jain, Graham Parry & team
Bank of America
Merrill Lynch
First-Place Appearances: 8
Total Appearances: 31
Team Debut: 1995
For a third consecutive year, the London-based Bank of America Merrill Lynch squad under the direction of Sachin Jain, 38, and 40-year-old Graham Parry wins this top spot. Investors value the analysts’ “strong connection with companies’ managements and their in-depth analysis of the companies’ businesses and financial results,” as one fund manager says. “They pay strong attention when forecasting quarterly and annual results.” BofA Merrill’s four-strong team monitors 27 regional pharmaceuticals companies, and although they are generally cautious on the sector — despite evidence of earnings-per-share growth — the analysts remain positive on companies with healthy pipelines. On this theme, in December they highlighted their buy ratings on Anglo-Swedish multinational AstraZeneca and Switzerland’s Roche Holding. AstraZeneca’s product line in development sets the standard for the industry, they believe, and could enable the drugmaker to deliver significant outsize growth relative to its regional peers. Moreover, a substantial pipeline newsflow throughout this year from the company’s early stage oncology lineup should continue to drive consensus upgrades and share price upside into 2016, the researchers add. The stock closed January at 4,743p, and they forecast a rise to 5,200p. The researchers peg Roche at Sf320, which implies a 28.3 percent premium to the shares’ value at the end of last month. In addition to pipeline optionality, drivers include the strength of the developer’s already-established business and their expectation that over the next 18 to 24 months, Roche should see “significant franchise protection data, which could significantly increase growth outlook,” they noted in December. More broadly, however, with rising costs for R&D and product launches pressuring margins, high drug prices in the U.S. and a cyclical turn away from an already highly valued defensive group, European pharmaceuticals are even more dependent on robust, successful pipelines to drive upside growth. Without them, the BofA Merrill crew contends, the sector is likely to outperform only a weak broader market.