Zacks Industry Outlook Highlights: Pfizer, Bristol-Myers, Johnson & Johnson, Merck and Eli Lilly

CHICAGO--(BUSINESS WIRE)--Zacks.com announces the latest Industry Outlook. Today’s outlook from Zacks Equity Research analyst Jason Napodano discusses the pharmaceutical sector. Highlighted stocks include: Pfizer (NYSE: PFE), Bristol-Myers Squibb (NYSE: BMY), Johnson & Johnson (NYSE: JNJ), Merck & Co. (NYSE: MRK), and Eli Lilly (NYSE: LLY).

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Here is the latest on the Pharmaceutical sector:

The industry’s cash position has never been stronger. Pfizer (NYSE: PFE), one of our top-picks for 2009, is sitting on over $30 billion in cash. Other buy rated names, including Bristol-Myers Squibb (NYSE: BMY) and Johnson & Johnson (NYSE: JNJ), are sitting on $8 billion and $15 billion, respectively. This should allow for a significant deal activity later in the year.

Given the difficult cash-raising environment during the second half of 2008, most small to mid-sized biotech firms are eager to partner with pharmaceutical companies in 2009. Asset prices for early-to-mid stage product candidates are very cheap, and pharmaceutical companies are now willing to look at phase I and phase II candidates in 2009 – something most managements have been hesitant to do in the past. This should create a much better environment for the entire industry to push higher in 2009 as sentiment on small biotech turns positive perhaps later in the year.

Finally, large-cap pharmaceutical names are paying hefty dividends. That’s something all investors should be looking for given the rocky financial markets. Pharmaceutical companies are well-capitalized with financial sound business models. Pfizer’s huge dividend of 7% is not only very attractive, it is also safe. Bristol, Merck & Co. (NYSE: MRK), and Eli Lilly (NYSE: LLY) are all yielding 5%.

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