3 Blue-Chip Stocks with Strong Buy Ratings from Analysts

When markets get unpredictable, many investors turn to blue-chip stocks for stability. These companies are known for their solid financials, steady growth, and reliable dividends, making them a wise choice for anyone looking to weather economic ups and downs.

Below, I have highlighted three fundamentally strong blue-chip stocks from the healthcare and pharmaceutical sector: AbbVie Inc. (ABBV), Merck & Co., Inc. (MRK), and Johnson & Johnson (JNJ) that one could consider investing in the near term.

Healthcare stocks, in particular, have a reputation for being dependable. They often hold up well during tough economic times because the need for healthcare doesn’t go away, no matter what the market is doing. In fact, healthcare is the third-largest industry in the S&P 500, and it’s poised for growth. PwC expects medical costs to rise 8% in 2025 for group markets, driven by inflation, prescription drug spending, and higher demand for mental health services.

At the same time, inflation persists. In November, consumer prices rose at a 2.7% annual rate, slightly higher than in October. As a result, the Federal Open Market Committee adjusted its monetary policy, cutting the overnight borrowing rate to a target range of 4.25%-4.5%. With uncertainty looming over the stock market, investors can look to invest in blue-chip stocks that offer stability, value, and diversification, shielding investments from potential downturns.

With that in mind, let’s evaluate the three Medical - Pharmaceuticals picks, beginning with the third choice.

Stock #3: Johnson & Johnson (JNJ)

JNJ is engaged in researching, developing, manufacturing, and selling healthcare products primarily focused on human health and well-being. The company offers a diversified range of products through the Innovative Medicine and MedTech segments.

On December 30, 2024, JNJ announced that the European Commission approved RYBREVANT® (amivantamab) in combination with LAZCLUZE™ (lazertinib) for the first-line treatment of advanced non-small cell lung cancer (NSCLC) in adults with EGFR mutations. This chemotherapy-free combination has shown superior efficacy compared to Osimertinib monotherapy for treating EGFR-mutated NSCLC.

Last year, in August, JNJ acquired V-Wave Ltd., a privately held company specializing in innovative heart failure treatment. The deal included an upfront payment of $60 million, with the potential for additional payments of up to $1.1 billion. This acquisition is set to enhance JNJ MedTech’s position in the cardiovascular space, broadening its portfolio of advanced heart failure treatment options.

For the third quarter of 2024, which ended on September 29, JNJ’s sales to customers increased 5.2% year-over-year to $22.47 billion. Its gross profit rose 5.2% from the year-ago value to $15.51 billion, while its adjusted net earnings from continuing operations amounted to $5.88 billion or $2.42 per share in the same period. Also, the company’s free cash flow for the quarter increased 16.9% year-over-year to $14 billion.

As per the updated guidance for the fiscal year 2024, JNJ forecasts operational sales between $89.20 billion and $89.60 billion, a 6% increase from 2023, primarily driven by recent acquisitions. The company also expects adjusted EPS between $9.97 and $10.07.

The consensus revenue estimate of $88.79 billion for the fiscal year 2024, which ended on December 31, represents a 4.3% increase year-over-year. The consensus EPS estimate of $9.96 for the same period indicates a marginal improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.

The stock has gained 1.1% year-to-date to close the last trading session at $146.23.

JNJ’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

JNJ has a B grade for Value, Stability, Sentiment, and Quality. It is ranked #14 out of 152 stocks in the Medical - Pharmaceuticals industry. Click here to see the additional ratings for JNJ (Growth and Momentum).

Stock #2: Merck & Co., Inc. (MRK)

MRK is a global healthcare company offering health solutions through its prescription medicines, including biologic therapies, vaccines, and animal health products. It operates through two segments: Pharmaceutical and Animal Health.

On January 8, 2025, MRK announced that China’s National Medical Products Administration (NMPA) has approved GARDASIL® (Human Papillomavirus Quadrivalent Vaccine, Types 6, 11, 16, and 18) for use in males aged 9 to 26. With this approval, GARDASIL became the first HPV vaccine authorized in China for preventing HPV-related cancers and diseases in males.

On November 19, the company’s board of directors declared a quarterly dividend of $0.81 per share of the company’s common stock for the first quarter of 2025. This dividend was paid to its shareholders on January 8, 2025.

With 14 years of consecutive dividend growth, MRK’s annual dividend of $3.24 translates to a yield of 3.21% on the current share price. Its four-year average yield is 2.87%. The company’s dividend payout has grown at a CAGR of 6.1% over the past three years.

MRK’s sales for the third quarter ended September 30, 2024, increased 4.4% year-over-year to $16.66 billion, while its KEYTRUDA product sales improved by 17.2% from the year-ago value to $ 7.43 billion. The company’s non-GAAP net income and non-GAAP EPS for the quarter stood at $3.98 billion and $1.57, respectively.

According to the full-year 2024 guidance, MRK forecasts worldwide sales to range from $63.60 billion to $64.10 billion, an increase from the previous guidance of $63.40 billion to $64.40 billion. The company also expects non-GAAP EPS to be between $7.72 and $7.77.

Analysts expect MRK’s revenue for the fourth quarter (ended December 2024) to increase 5.9% year-over-year to $15.49 billion, while its EPS for the same period is expected to grow significantly from the prior year to $1.80. Moreover, the company topped the consensus revenue estimates in each of the trailing four quarters.

The stock has gained marginally year-to-date to close the last trading session at $99.85.

It is no surprise that MRK has an overall rating of A, equating to a Strong Buy in our POWR Ratings system. It also has an A grade for Quality and a B for Value and Stability. Within the same industry, it is ranked #8 out of 152 stocks.

In addition to the POWR Rating grades I’ve just highlighted, you can see MRK’s Growth, Momentum, and Sentiment ratings here.

Stock #1: AbbVie Inc. (ABBV)

ABBV is a global diversified research-based biopharmaceutical company engaged in manufacturing and selling medications and therapies. It offers a comprehensive product portfolio across Immunology, Oncology, Neuroscience, Eye Care, Aesthetics, and Other Specialties.

On December 13, 2024, ABBV announced the acquisition of Nimble Therapeutics to strengthen its immunology pipeline further. The deal includes Nimble’s lead asset, an investigational oral peptide IL-23R inhibitor currently in preclinical development for psoriasis, as well as a pipeline of innovative oral peptide candidates targeting various autoimmune diseases with significant unmet needs.

Additionally, ABBV will gain access to Nimble’s proprietary peptide synthesis, screening, and optimization platform, designed to enable the discovery and optimization of oral peptide therapeutics.

On October 30, the company’s board of directors increased the quarterly dividend from $1.55 to $1.64 per share, payable on February 14, 2025 to the shareholders of record on January 15, 2025. This reflects an increase of approximately 5.8%, continuing ABBV’s strong commitment to returning cash to shareholders through a growing dividend.

It pays an annual dividend of $6.56, which translates to a yield of 3.65% at the current share price. Its four-year average dividend yield is 3.89%. Moreover, the company’s dividend payouts have increased at an impressive CAGR of 7.7% over the past five years.

During the fiscal third quarter (ended September 30, 2024), ABBV’s net revenue increased 3.8% year-over-year to $14.46 billion, while the company’s Neuroscience segment reported net revenue of $2.36 billion, indicating a 15.6% growth from the prior-year quarter. ABBV’s operating earnings came in at $3.83 billion, up 67.9% year-over-year, while its adjusted earnings per share grew 1.7% from the year-ago value to $3.

Looking ahead, ABBV forecasts full-year 2024 and raises its adjusted EPS to range between $10.90 and $10.94, from the prior forecast of $10.67 and $10.87.

Street expects ABBV’s revenue and EPS for the fiscal fourth quarter (ended December 2024) to increase 3.5% and 3.4% year-over-year to $14.80 billion and $2.88, respectively. Moreover, it beat the revenue estimates in each of the trailing four quarters, which is promising.

Shares of ABBV have gained 6.7% over the past six months and 10.1% over the past year to close the last trading session at $178.50.

ABBV’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

It has a B grade for Growth, Value, Stability, Sentiment, and Quality. Out of 152 stocks in the Medical - Pharmaceuticals industry, ABBV is ranked #3. Click here to see ABBV’s rating for Momentum.

What To Do Next?

Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:

3 Stocks to DOUBLE This Year >

JNJ shares fell $0.01 (-0.01%) in after-hours trading Wednesday. Year-to-date, JNJ has declined -1.62%, versus a 0.58% rise in the benchmark S&P 500 index during the same period.

Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.

More...