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TheStreet Open House

7 Big-Pharma Stocks With Untapped Potential

BOSTON ( TheStreet) -- Investors seeking steady dividends coupled with inflation-beating share appreciation may want to consider big drugmakers' stocks. They're expected to have as yet unrecognized growth potential from emerging market demand.

Investors are discounting the potential profit contribution from emerging markets because of their recent economic volatility and investors focus on the more dominant U.S. market, while there is also a misperception that operating profit margins coming from such markets are too low to matter, wrote Damien Conover, a Morningstar drug industry analyst, in a research report. "We expect this discount will dissipate as emerging markets' economies stabilize and their sales contribution increases."

Conover estimates that sales from emerging markets will represent 26% of Big Pharma's total sales by 2015, up from 19% in 2011, aided by rapid wealth creation in emerging-market countries that will drive demand for branded pharmaceuticals and a shift in companies' revenue mix as patent losses in developed markets result in their decline as a percentage of total revenue.

Conover cited seven top international drug-company stocks in his report, and they have dividend yields ranging from 2% for the German chemicals conglomerate Bayer (BAYRY) to 6% for drugmaker AstraZeneca (AZN).

Here are summaries of the seven biggest international pharmaceutical companies' stocks, arranged in inverse order of the number of analysts' "buy" ratings:

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