10 Pharma Stocks With Upside

NEW YORK (TheStreet) -- The following 10 global pharmaceutical stocks will likely benefit from an expected 5%-7% growth in global pharmaceutical markets in 2011 to $880 billion, according to IMS Health.

Analysts expect these 10 stocks to outperform their peers and broader markets, based on the upside implied from their respective 12-month price targets. These stocks have an upside potential of 28%-70% with a mean upside value of around 40% and average buy ratings of 69%.

In comparison, pharma giants Johnson & Johnson ( JNJ), Pfizer ( PFE), Merck ( MRK), Abbott Laboratories ( ABT), Bristol Myers Squibb ( BMY) and Eli Lilly ( LLY) have upsides of 3%-18%, according to analysts' estimates.

10. Ironwood Pharmaceuticals ( IRWD) discovers, develops, manufactures and commercializes drugs.

The company reported a loss of 16 cents per share for 2010 third quarter, in comparison to a loss of 18 cents per share in the quarter-ago period. Loss per share is pegged at 59 cents for 2010 and 57 cents for 2011, in comparison to a loss of $10.0 per share for 2009, according to analysts polled by Bloomberg.

The stock gained around 18.2% year-to-date, whereas Forest Laboratories ( FRX), Cephalon ( CEPH) and Salix Pharmaceuticals ( SLXP) returned around 1.3%, -8.8% and -29.0%, respectively.

The stock received 71% buy ratings from five of the seven analysts covering the stock, while two analysts rated a hold.

Data from Bloomberg has analysts forecasting an average price target of $15.6, up 28% from the current level.

9. Amgen ( AMGN) discovers, develops, manufactures, and markets drugs based on cellular and molecular biology.

The company is expected to report earnings of $1.10 per share for 2011 first quarter, against $1.18 and $1.08 per share in the year-ago and quarter-ago periods, respectively, analysts polled by Bloomberg forecast. For 2011, earnings per share are pegged at $4.78 and $5.29 for 2012.

The stock's return-on-equity was 19.9% during the past 12 months, whereas GlaxoSmithKline ( GSK), Teva Pharmaceutical Industries ( TEVA) and Genzyme ( GENZ) had ROEs of 17.3%, 16.2% and 5.5%, respectively.

Data from Bloomberg has analysts forecasting an average 12-month target price of $66.1, up 29% from the current level. Of the 30 analysts covering the stock, 21 recommend buying, 7 suggest holding and 2 rate selling, representing 70% buy ratings.

8. Celgene ( CELG) is a global biopharmaceutical company engaged in the discovery, development and commercialization of therapeutics designed to treat cancer and immune/inflammatory related diseases.

According to analysts polled by Bloomberg, the company will likely report earnings of 65 cents per share in 2011 first quarter, against 50 cents and 45 cents per share in the year-ago and quarter-ago periods, respectively. For 2011, earnings per share are pegged at $2.63 and $3.27 for 2012, up from $1.88 for 2010.

Of the 31 analysts covering the stock, 24 recommend a buy, 7 rate a hold, representing 77% buy ratings. In comparison, Mylan ( MYL), Spectrum Pharmaceutical ( SPPI) and Cell Therapeutics ( CTIC) have buy ratings of 71%, 67% and 0%, respectively.

Analysts expect the stock to gain around 30% over the next 12 months with a consensus target price of $68.8.

7. Salix Pharmaceuticals ( SLXP) develops and commercializes prescription pharmaceutical products for gastrointestinal diseases.

The company reported earnings of 40 cents per share for 2010 fourth quarter, in comparison to losses of 13 cents per share and 5 cents per share in the year-ago and quarter-ago periods, respectively. For 2011, earnings per share are pegged at $1.71 and $2.55 for 2012, a turnaround from a loss of 42 cents per share reported for 2010.

The stock is expected to gain an average 34% over the next 12 months, as per analysts polled by Bloomberg. In contrast, Perrigo ( PRGO), King Pharmaceuticals ( KG) and Watson Pharmaceutical ( WPI) are likely to provide returns of -1%, -5% and 9%, respectively.

Of the 17 analysts covering Salix Pharmaceuticals, 10 recommend buying, 5 rate holding and 2 suggest selling.

6. WuXi PharmaTech (Cayman) ( WX) provides pharmaceutical, biotechnology and medical device research and development outsourcing.

For 2010 third quarter, the company's earnings per share were 59, over earnings of 19 cents per share and 18 cents per share reported in the year-ago and quarter-ago periods, respectively.

The stock's return-on-equity was 20.7% during the past 12 months, whereas Covance ( CVD), Pharmaceutical Product Development ( PPDI) and Charles River Laboratories International ( CRL) had ROEs of 5.1%, 9.4% and -32.6%, respectively.

Data from Bloomberg has analysts predicting an average 12-month target price of $20.5, up 35% from the current level. Of the 10 analysts covering WuXi, 9 recommend buying and 1 suggests holding.

5. Par Pharmaceutical ( PRX) is engaged in developing, licensing, manufacturing and distributing generic and branded drugs.

Analysts polled by Bloomberg foresee the company reporting earnings of 95 cents per share in 2011 first quarter, as against 75 cents and 48 cents per share in the year-ago and quarter-ago periods, respectively. For 2011, earnings per share are pegged at $3.15 and $3.12 for 2012, up from $2.60 reported for 2010.

The stock's return-on-equity was 16.5% during the past 12 months, while Watson Pharmaceuticals ( WPI), Lannett ( LCI) and Mylan reported ROEs of 5.8%, 9.4% and 9.6%, respectively.

On average, the stock has a 36% upside over the next 12 months with a consensus target price of $42.0, as according to analysts polled by Bloomberg. The stock received a buy rate from three of the eight analysts, while the remaining five recommend a hold.

4. Human Genome Sciences ( HGSI) researches and develops proprietary pharmaceutical and diagnostic products.

Analysts polled by Bloomberg expect the company to report a loss of 40 cents per share in 2011 first quarter, against a loss of 26 cents and 46 cents per share in the year-ago and quarter-ago periods, respectively. For 2011, loss per share is pegged at $1.45 and 46 cents for 2012.

The stock is likely to gain an average 37% over the next 12 months, analysts polled by Bloomberg report. In comparison, Biogen Idec ( BIIB), Vertex Pharmaceuticals ( VRTX) and Hospira ( HSP) are will provide returns of -5%, 2%, and 15%, respectively.

Of the 22 analysts covering the stock, 16 recommend a buy, 4 suggest a hold and 2 rate selling.

3. Incyte ( INCY) is a drug discovery and development company focused on developing small molecule drugs.

For 2010 fourth quarter, the company reported earnings of 24 cents per share, opposed to losses of 74 cents per share and 26 cents per share in the year-ago and quarter-ago periods, respectively.

During the past 12 months, the stock surged around 19.0%, while Celgene ( CELG), Cephalon ( CEPH) and Isis Pharmaceuticals ( ISIS) returned around -13.4%, -19.3%, and 0.3%, respectively.

On an optimistic note, 13 of the 19 analysts covering the stock recommend buying, 5 suggest holding and 1 rates selling. The stock has 47% upside over the next 12 months with a consensus target price of $20.1, analysts polled by Bloomberg envisage.

2. Dendreon ( DNDN) is a biotechnology company focused on discovering and developing immunologically-based therapeutic products to fight cancer.

Analysts polled by Bloomberg expect the company to report 49 cents loss per share for 2010 fourth quarter, against a loss of 28 cents and 56 cents per share in the year-ago and quarter-ago periods, respectively. For 2011, loss per share is pegged at $1.76, in comparison to a loss of $2.72 per share for 2010. The company is anticipated to turn profitable in 2012 with earnings per share of $1.09.

Of the 21 analysts covering the stock, 14 recommend buying, 5 suggest holding, and 2 rate selling, representing 67% buy ratings. In comparison, MannKind ( MNKD) and Agenus ( AGEN) have buy ratings of 17% and 0%, respectively.

The stock has 57% upside over the next 12 months with a consensus target price of $52.7, according to analysts polled by Bloomberg.

1. Nektar Therapeutics ( NKTR) is a clinical-stage biopharmaceutical company developing a pipeline of drugs that utilize company platforms.

For 2010 fourth quarter, analysts polled by Bloomberg foresee the company reporting a loss of 14 cents per share, against a loss of 8 cents and 9 cents per share in the year-ago and quarter-ago periods, respectively. For 2011, loss per share is pegged at 67 cents and 45 cents for 2012.

Of the 11 analysts covering the stock, 8 recommend buying and 3 suggest holding, representing 73% buy ratings. In comparison, Affymax ( AFFY), MAP Pharmaceuticals ( MAPP) and Enzon Pharmaceuticals ( ENZN) have buy ratings of 58%, 75%, and 25%, respectively.

The stock has a 70% upside over the next 12 months with a consensus target price of $16.3, analysts polled by Bloomberg forecast.

>To see these stocks in action, visit the 10 Pharma Stocks With Upside portfolio on Stockpickr.

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