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4 Pharma Stocks to Buy & Hold: Najarian

Wednesday, 4 Jan 2012 | 1:29 PM ET

With the XPH returning about 11% over the past year, can the relatively defensive Pharma sector continue to perform?

The short answer is yes.

Deutsche analyst Barbara Ryan points to a string of reasons she expects the sector to continue higher.

- low valuations
- benefit from risk-off
- high dividend yield
- growing cash flows
- share repurchases and dividend increases
- product pipelines are improving.

Bull Case for Drug Stocks
Barbara Ryan, analyst at Deutsche Bank, explains why she has a "buy" rating on Bristol Myers Squibb, Pfizer and Merk with a $43 price target. "Bristol Myers is clearly the growth name in the group," she adds.

Those are the factors that drove multiple expansion in 2011 and she expects those same factors to work just as effectively in 2012.

She tells us her top 3 picks in the space are Merck, Pfizer and Bristol Myers .

Pete Najarian agrees with Ryan entirely. “I hold a piece of every one of these,” he reveals. And he also likes Lilly. “That’s another one where you get a great dividend yield and good valuations.”


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Trader disclosure: On Jan 4, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; P. Najarian is long AAPL; P. Najarian is long C; P. Najarian is long JPM calls; P. Najarian is long WFC calls; P. Najarian is long MSFT; P. Najarian is long INTC; P. Najarian is long YHOO; P. Najarian is long MOS; J. Najarian is long call spreads AAPL; J. Najarian is long call spreads AKS; J. Najarian is long call spreads PNC; J. Najarian is long call spreads GS; J. Najarian is long call spreads CSCO; J. Najarian is long call spreads LULU; J. Najarian is long call spreads TIVO; J. Najarian is long call spreads TIMM

For Barbara Ryan
Abbott Laboratories - is company an Investment Banking client of DBSI and Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from this company within the past year. This company has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services.
Bristol Myers Squibb Company is an Investment Banking client of DBSI and Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from this company within the past year. This company has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services.

For Mark Gulley
No disclosures

For Stanley T. Crooke
No disclosures

For Ken Sena
Yahoo - Evercore or an affiliate expects to receive or intends to seek compensation for investment banking services from this subject company within the next three months.
Groupon - Evercore or an affiliate expects to receive or intends to seek compensation for investment banking services from this subject company within the next three months.


CNBC.com with wires.

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BMY
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LLY
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MRK
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PFE
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APH
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