AstraZeneca, Bayer, and Roche Tapped as Top Pharma Buys by BofA Securities

BofA Securities named AstraZeneca, Bayer, and Roche as its top investment picks in the pharmaceutical sector, citing a favorable mix of pipeline potential and current valuation. In a research note published Tuesday, the firm also designated Genmab as its high-conviction choice among small- to mid-cap (SMID) biotech companies.

Large-Cap Conviction

For AstraZeneca, BofA analysts acknowledged that the stock has faced pressure from speculation that has renewed debate over its pipeline strength and risks from loss-of-exclusivity. However, the firm argues that upcoming pipeline data, including the S4/AVANZAR readout, holds a positive risk-reward profile that could rebut the negative narrative. BofA also pointed to a busy newsflow calendar expected in 2027, featuring updates on CAMBRIA1, saruparib, and an oral PCSK9 inhibitor.

BofA's bullish stance on Bayer is based on its valuation, an under-appreciated pharmaceutical business, and improving free cash flow. The note highlighted the drug asundexian as an anchor asset for the company, with significant contributions also expected from Nubeqa and Kerendia.

Roche was rated a Buy, with BofA increasing its price objective on the stock to CHF 415 from a previous CHF 380. Key drivers for the positive outlook include the anticipated launch of giredestrant and favorable risk-reward on fenebrutinib. The firm also noted a meaningful pipeline beyond these assets, including trontinemab and NXT-007.

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SMID Pick and Sector Outlook

In the SMID biotech space, Genmab was named BofA's top pick. The selection is based on the expectation of three high-conviction Phase III data readouts anticipated in the fourth quarter of 2026.

The BofA note also mentioned that Novartis, despite already being the sector's best year-to-date performer, remains a Buy. This suggests the firm continues to see value in the stock even after its strong run.