< The 2014 All-America Research TeamChristopher SchottJ.P. MorganFirst-place appearances: 0
Total appearances: 4
Team debut: 2011J.P. Morgan’s Christopher Schott advances from third place to second on this roster and from runner-up to No. 3 in Pharmaceuticals/Major. He projects that the high level of merger and acquisition deals taking place among U.S. specialty pharmaceuticals companies this year will continue into 2015. “The elevated activity in the group appears to be driven by a combination of the companies’ desire to gain scale in key verticals and to improve tax and capital structures,” says Schott, “trends we view as favorable developments for the industry.” He is advising investors to favor Actavis, an integrated specialty pharmaceuticals company that moved its headquarters from Parsippany, New Jersey, to Ireland last October. “We do not believe the company’s current valuation of 11 times 2016 earnings per share appropriately reflects the mix of organic and inorganic growth potential of the company,” the analyst explains, “and we see a clear path for multiple expansion over time.” Moreover, the drugmaker may see longer-term double-digit organic earnings-per-share growth, “supported by investments in its branded portfolio, a broad generics portfolio with a leading position in first-to-files and synergies from the Forest Laboratories acquisitions,” adds Schott. (Activis acquired its New York–based rival in July for $28 billion.) Predicting that management’s active business development strategy will accelerate further expansion, he pegs the stock at $300, representing a 27.7 percent premium to its price in mid-September. “Chris does a great job of gathering topical subjects affecting his group, such as M&A, payer pushback and tax inversions,” observes one portfolio manager, “and packages his thoughts in concise points.” In particular, another backer adds, “he did the best job on the Street of explaining the strategy and technicalities of the proposed Pfizer split.”