Bank of America has designated AstraZeneca, Bayer and Roche as its favored names in the pharmaceutical sector, citing a mix of pipeline risk-reward dynamics and valuation considerations. In the small- and mid-cap biotech space, the firm identifies Genmab as its top conviction pick.
The broker notes AstraZeneca has faced share pressure amid speculation about eplontersen and BMY, which has renewed discussion around potential loss-of-exclusivity risk and the resilience of its pipeline. BofA contends that forthcoming pipeline data - specifically the S4/AVANZAR readout - will be important to address that narrative and expects a favorable risk-reward if results prove supportive.
Looking further ahead, BofA points to a substantial 2027 expected newsflow calendar for AstraZeneca, which it says includes CAMBRIA1, trials of saruparib, lifecycle management initiatives for Farxiga, and development of an oral PCSK9 inhibitor. The broker views these catalysts collectively as supportive of the company’s case from a risk-reward perspective.
On Bayer, BofA’s positive outlook is grounded in what it describes as attractive valuation, a pharma business whose contribution may be under-appreciated by the market, and improving free cash flow. Within Bayer’s pharmaceutical portfolio, the firm highlights asundexian as the anchor asset and also cites expected contributions from Nubeqa and Kerendia.
Roche is rated a Buy by BofA, which points to the company’s sizable giredestrant launch as a key commercial driver. The broker also sees favorable risk-reward on fenebrutinib and emphasizes a deeper pipeline that includes FGF21, TL1A, trontinemab and NXT-007. BofA increased its price objective on Roche to CHF415 from CHF380.
In the SMID biotech cohort, Genmab is BofA’s top pick, selected on the basis of three high-conviction Phase III data readouts that the firm expects in 4Q26E. BofA’s positioning reflects a focus on near-term clinical catalysts as critical value drivers for smaller-cap biotech names.
The firm continues to carry a Buy rating on Novartis as well, noting that the company remains a Buy despite being the sector’s strongest year-to-date performer.
Context and implications
BofA’s selections underscore the importance the firm places on tangible pipeline catalysts and valuation gaps across large-cap pharma and SMID biotech. The recommendations imply potential relative upside tied to upcoming clinical readouts and commercial launches, while also reflecting an assessment of cash-flow trajectories and strategic assets within company portfolios.