< The 2014 All-Japan Research Team
Although he slips to No. 2 after prevailing on this roster for 12 straight years, All-Japan Research Team Hall of Famer Hidemaru Yamaguchi of Citi reaps praise for his “underlying investment philosophy, which does not swing as a result of noises in the stock market,” in the words of one money manager. Japan’s pharmaceuticals names slipped 4.2 percent this year through mid-March but still bested the broad market by 6.8 percentage points. That outperformance, Yamaguchi notes, is thanks to “the defensive nature of the sector, with oncology-related assets getting a lot of attention from investors.” However, earnings growth for Japan’s pharma providers is in line with that of the country’s industrial companies, he adds, which “means that it is not exciting.” The broader sector, down 3.8 percent year to date as of mid-March, has been dragged down by “news flow related to national health care insurance price cuts” taking effect this month, the analyst says. Against this backdrop, he is favoring stocks with exposure to the oncology segment. Examples include Osaka-based Ono Pharmaceutical Co., which is partnering with Bristol-Myers Squibb Co. of the U.S. in developing an investigational cancer immunotherapy, nivolumab, that Yamaguchi thinks will become a $7 billion product by 2023. Ono’s stock was trading at ¥9,060, and his target price is ¥11,100. Similarly, he recommends buying Tokyo-based Chugai Pharmaceutical Co. on the potential strength of the antibody it is pursuing with parent company Roche Holding of Switzerland, as well as Astellas Pharma, citing positive expectations for its prostate cancer drug Xtandi. |