What If Trump Keeps Badmouthing Drug Pricing?

Pharmaceutical companies breathed a sigh of relief when Donald Trump prevailed on Election Day. His opponent, Hillary Clinton, had made prescription drug pricing a centerpiece of her campaign.

However, according to Bernstein analyst Tim Anderson, pharma stocks may not be off the hook when Trump moves into the White House.

In a Time "Person Of The Year" profile, Trump was quoted as saying he will “bring down drug prices.” He didn’t provide any details about what exactly he plans to do, but the quote was enough to send the iShares NASDAQ Biotechnology Index (ETF) IBB down 3.9 percent on Wednesday.

Anderson believes Trump will continue to be a wildcard for pharma stocks.

However, despite Trump’s unpredictability, Anderson still feels the election’s outcome is good news for pharma investors.

“The republican sweep in November was a materially positive event, in our view, for therapeutics companies,” he wrote.

Bernstein named Merck & Co., Inc. MRK and Novartis AG (ADR) NVS its two top stock picks in the space. Anderson sees strong growth and no binary event risk at Novartis and predicts better-than-expected tactical maneuvering from Merck management.

The firm also has Overweight ratings on Eli Lilly and Co LLY, Pfizer Inc. PFE and Roche Holding Ltd. (ADR) RHHBY.

Image Credit: By Michael Vadon (Own work) [CC BY-SA 4.0], via Wikimedia Commons