Here are 3 top drug stock ideas from JP Morgan — including Merck

A research lab at Merck
John Tlumacki | The Boston Globe | Getty Images

J.P. Morgan shared with its clients the firm's best current stock picks in the U.S. pharmaceuticals sector.

"We continue to see an attractive fundamental set-up for the Major Pharma group with an upward bias to EPS estimates and with the group still inexpensive in our view, trading at a significant discount to the broader market," the firm's pharmaceuticals research group said in a report Tuesday. "With valuation still inexpensive relative to the market in our view and healthy fundamentals, we continue to see opportunities in the group."

The analyst team noted pharma stocks are currently trading at about 15.1 times estimated 2018 earnings per share versus the 17.5 times for the S&P 500.

Here are three overweight-rated companies that made the J.P. Morgan's recommended list and their price targets.

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