1 week Ago
Goldman Sachs thinks it's time to lean into Johnson & Johnson for its defensive qualities and strong pharmaceutical business. Analyst Asad Haider assumed coverage of the pharma giant and upgraded it to buy from neutral. His $172 price target, up from $157, implies upside of 14.
2%. "Looking across the Innovative Medicines franchise we see JNJ as being in the early innings of multiple new biopharma product cycles," the analyst wrote in a note to clients. "We find notable the number and range of opportunities across therapeutic areas.
" Haider pointed out that Johnson & Johnson's innovative medicines business, which makes up roughly 65% of the company's sales but 82% of profits, is forecasted to grow more than other companies in the space. The strength of this business, in Haider's opinion, should overshadow what he views as "overdone" concerns around the loss of exclusivity of the company's Stelara drug. Stelara, a therapy for plaque psoriasis and psoriatic arthritis, is one of the company's highest-revenue items.
"We believe consensus is under-appreciating the trajectory of the Innovative Medicine business as the company laps the Stelara cliff into numerous new product cycles across multiple large markets such as IBD, psoriasis, neuropsych, multiple myeloma, bladder cancer and EGFR mutated non-small-cell lung cancer," the analyst said. Johnson & Johnson has already established a broad portfolio of multipleoth myeloma therapy lines in both stem cell transplant eligible and ineligible patients, which could cover all potential patients, he said. Haider also called the stock a "defensive bellwether," pointing out that the company boasts $80 billion in balance sheet capacity, which is the industry's highest.
"We expect the company to continue on its strong track record of augmenting revenue growth in the Innovative Medicines business via acquisitions and manage through any potential additional resolution on outstanding Talc litigation if needed," he said, adding that the growth of Johnson & Johnson's MedTech business appears stable but remains dependent on M & A activity. Johnson & Johnson shares jumped 2.6% on the back of Goldman's upgrade.
The stock is up about 4.2% this year, significantly outperforming the broader market. JNJ 1Y mountain JNJ stock performance over the past year.
The upgrade comes during a tumultuous time for global markets, as investors adjust global economic growth expectations to account for new U.S. tariffs on imported goods.
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