Biopharma Companies' Second-Half Performance to be Largely Driven by Fundamentals, Morgan Stanley Says

Major US biopharmaceutical companies' performance in the second half of the year is likely to be driven largely by fundamentals, as the focus shifts away from economic factors, Morgan Stanley said in a note e-mailed Wednesday. The investment firm revised its price targets for several biopharma stocks it covers ahead of the latest earnings season. "The macro has been a key driver of large-cap biopharma performance over the first half of the year," the brokerage said in a note to clients. "Looking into the second half, we expect fundamentals to be more of a driver. We prefer stocks with upside from product cycles and/or pipeline catalysts." Morgan Stanley raised its price target for Eli Lilly (LLY) to $1,347 from $1,344. It expects second-quarter earnings per share of $9.06 for the pharmaceutical giant, compared with Wall Street's estimate of $8.80. The firm projects revenue of $20.78 billion, while the Street is looking for $20.47 billion. The firm expects Johnson & Johnson (JNJ) to deliver a second-quarter beat, with EPS projected at $2.90 and sales at $25.46 billion. Morgan Stanley raised its price target on the stock to $284 from $283. Pfizer's (PFE) second-quarter EPS is.