The U.S. large-cap pharmaceutical industry is the place to be right now because of its history of doing well in tough economic times and cheap share prices, according to Credit Suisse, which initiated coverage on the group late Thursday. The firm said investors still need to be selective in the space, however, naming two top ideas in Merck and AbbVie . Outside of those two favorites, it rates Eli Lilly and Pfizer outperform as well.
The firm sees 20% upside on Merck from here, saying the stock has "low-risk and high short-term growth," which is "important in today's macro environment." For AbbVie, it sees 11% upside from here, noting it has the "highest dividend yield among peers." The stock currently yields 3.89%. The report cites data showing U.S. pharma beating the S & P 500 during major recessions and notes that the sector is performing well this year.