UBS: 8 Pharma Stocks to Watch

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK ( Insider Monkey) -- UBS Investment Research published a report entitled "UBS Pharma- Large Cap and Specialty" on Jan. 11, 2012.

In their report, Marc Goodman, Ami Fadia, Matthew Harrison, and Derek Yuan discuss the expectations for the fourth quarter of 2011 for selected pharmaceutical companies.

UBS Investment Research also believes that there are many opportunities in the special pharmaceutical sector, with continued synergies, significant deal glows, and robust core growth. Here is what UBS thinks about the following pharmaceuticals:

Teva Pharmaceuticals ( TEVA) is a pharmaceutical company that develops, produces, and markets generic drugs.

Teva has been given a buy rating by UBS because the company is in a good position to increase its market share. The company has a good position in the U.S. market and is looking to increase its presence in Europe and other emerging markets. Its earnings growth is expected to be in the double-digits due to the company's strong P-IV pipeline.

UBS is of the opinion that the Cephalon deal is going to benefit the company substantially. Shares of Teva are currently trading at $44.5 per share and are expected to reach a price target of $60, indicating a potential upside of around 35%. John Paulson had $74 million invested in Teva at the end of the third quarter.

Mylan Labs ( MYL) engages in the development, manufacture, marketing, licensing, and distribution of generic and branded pharmaceuticals. UBS Investment Research has given the company a buy rating due to an expected increase in its margins. Mylan is going to leverage its low-cost Matrix manufacturing platform which will improve its gross margins.

UBS expects revenues to be around $1.5 billion by the end of 2012. Shares of Mylan are currently trading at $21.7 per share and are expected to reach a price target of $28, indicating a potential upside of 29%. Steve Cohen's SAC Capital boosted its stake in Mylan by 45% during the third quarter.

Perrigo ( PRGO) develops, manufactures, and distributes over-the-counter and generic prescription pharmaceuticals and other products. It has been given a buy rating by UBS Investment Research due to Perrigo's store branded business being more sustainable than appreciated.

The company is leveraging its large customer network, its customization abilities, and its low-cost manufacturing. Shares of Perrigo are currently trading at $97 per share and are expected to go north of $115, indicating a potential upside of 18.5%. Ken Fisher had $61 million investe in PRGO at the end of September.

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