5 Merrill Lynch US 1 Health Care Stocks Could Be Big 2019 Winners

Market trading boards are seen at the Australian Securities Exchange in Sydney, Friday, February 9, 2018. ( AAP Image/Ben Rushton) NO ARCHIVING

With just over six weeks left in what has been a very volatile 2018, many investors are wondering which direction the market will take now that Democrats are taking over the House of Representatives. The leaders of the party maintain that the issue that was biggest with voters, what helped to propel them to victory, was health care, and with an aging U.S. population, it’s a good bet that it was indeed high on voters’ lists.

With top pundits bullish on the health care sector for 2019, we decided to screen the Merrill Lynch US 1 stock list, which is the firm’s top stock picks for institutional and high net worth clients, for health care companies that made the cut. We found five that all look very attractive for growth investors with a degree of risk tolerance.

Allergan

This stock has taken a beating over the past month and is offering an outstanding entry point. Allergan PLC (NYSE: AGN) is a specialty pharmaceutical company that develops, manufactures and markets branded products. The company’s growth has been driven largely by acquisitions supported by internal growth.

Allergan markets a portfolio of best-in-class products that provide valuable treatments for the central nervous system, eye care, medical aesthetics, gastroenterology, women’s health, urology, cardiovascular and anti-infective therapeutic categories, and it operates the world’s third-largest global generics business, providing patients around the globe with increased access to affordable, high-quality medicines.

Allergan is an industry leader in research and development, with one of the broadest development pipelines in the pharmaceutical industry and a leading position in the submission of generic product applications globally. The Merrill Lynch analysts note the company’s Aesthetics leadership and that the substantial pipeline optionality is not priced in.

Allergan shareholders are paid a 1.70% dividend. The Merrill Lynch price target for the stock is $212, and the Wall Street consensus price objective is set at $209.44 a share. The stock closed Thursday’s trading at $169.31 per share.

CVS

This top stock may be offering an excellent entry point. CVS Health Corp. (NYSE: CVS) is one of the largest health care companies in the United States. It provides retail, mail and specialty pharmacy dispensing services and pharmacy benefits. Upon the completion of its pending acquisition of Aetna, CVS will become one of the most vertically integrated publicly traded health care companies.

The company is in the process of completing its massive $69 billion bid for health care provider Aetna. While initially there were some concerns over regulatory approval, top CVS management has confirmed recently it is making solid progress with states regulators and the deal remains on track, with management recently highlighting some opportunities around what the new combined company can accomplish.

CVS investors are paid a 2.50% dividend. Merrill Lynch has a price target of $92, and the posted consensus target was last seen at $90.70. The shares closed at $80.05 on Thursday.

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