HSBC has published its current top picks within the pharmaceutical sector, singling out three large-cap companies that it sees as offering a combination of growth potential and value. The bank's assessments focus on expansion prospects, development pipelines and identifiable risk factors that it judges to be manageable.
AbbVie is rated Buy by HSBC with a price target of USD275.00. The bank classifies the company as a Growth/GARP - growth at a reasonable price - idea and highlights what it calls sector-leading growth prospects alongside a patent cliff that HSBC views as manageable. The analysis also addresses competition concerns around AbbVie's Skyrizi, noting that market worries about rivals Tremfya and Icotyde may be overstated and that Skyrizi's competitive position could be stronger than current sentiment implies.
On the clinical front, HSBC's note recalls AbbVie's recent trial updates: positive top-line results from a Phase 1 study of the obesity candidate ABBV-295 and confirmation that a Phase 3 study of Skyrizi for Crohn's disease met its primary endpoints. These data points are presented as supporting AbbVie's growth thesis within the bank's framework.
Johnson & Johnson retains a Buy recommendation from HSBC, with the bank raising its price target to USD280.00 from USD265.00. The company is similarly categorized as a Growth/GARP idea. HSBC emphasizes that Johnson & Johnson is set for accelerating growth over the coming years and that much of that improvement is expected to come with limited dependence on new pipeline launches. The bank also notes that potential policy pressures - such as tariffs or most favored nation pricing - are seen as having limited impact on the company's outlook.
HSBC's summary includes the regulatory milestone for Johnson & Johnson: U.S. FDA approval for ICOTYDE, an oral therapy for moderate-to-severe plaque psoriasis. The bank's remarks also note that other brokers, including BofA Securities, have recently raised their price targets on the company, citing the strength of its pipeline outlook.
For investors seeking value within the sector, HSBC points to Pfizer as its preferred value pick. The stock is rated Buy and its price target was lifted to USD32.00 from USD29.00. HSBC argues that the market may be underappreciating the potential of atirmociclib and Pfizer's next-generation immuno-oncology strategy, and that the company faces limited risks from value-destructive transactions, supporting its appeal as a value proposition.
Clinical developments at Pfizer cited in HSBC's note include positive Phase 2 results for atirmociclib in breast cancer, where the trial showed a statistically significant improvement in progression-free survival. In addition, Pfizer disclosed that its experimental antibody tilrekimig met the primary endpoint in a Phase 2 study for atopic dermatitis. These outcomes are featured as evidence bolstering Pfizer's prospective upside under HSBC's valuation view.
Across its coverage, HSBC has framed each pick with valuation and execution considerations: AbbVie for its growth profile and pipeline milestones, Johnson & Johnson for an accelerating growth trajectory with limited exposure to certain policy risks, and Pfizer for a combination of undervalued clinical assets and restrained deal risk. The bank's price targets and Buy ratings encapsulate those views while highlighting the specific clinical and regulatory developments that underlie its recommendations.
Industry impact: HSBC's guidance touches on large-cap pharmaceuticals and the broader healthcare sector, where clinical readouts and regulatory actions continue to drive investor valuation and positioning.