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Morgan Stanley believes that Johnson and Johnson has stronger earnings potential driven by its robust product cycle. The bank upgraded the pharmaceutical stock to an overweight rating from equal weight and lifted its price target to $262 from $200, signaling a gain of 17% from current levels. Analyst Terence Flynn attributed the change to higher estimates from new products at the pharma giant. “While significant further multiple expansion seems unlikely, we’d note the stock is trading at a ~3x discount to the S & P, and we do see a path to EPS driven beats from one of the most robust new product cycle offerings in Biopharma, where in aggregate we are ~20% above consensus,” he wrote. JNJ 1Y mountain JNJ 1Y chart Flynn noted that this view was reinforced by a recent Therapeutics Doctor Days conference. He raised his estimate for a handful of Johnson & Johnson medications, which resulted in higher annual revenues estimates overall. The analyst added that he’s also keeping a close eye on several other drugs and trials currently in the company’s pipeline. “We now project 2026-2030 CAGRs for revenue/EPS of ~5.5%/12% which compares favorably to Biopharma peers and places JNJ in the ‘higher growth’ cohort,” he wrote. “Furthermore JNJ’s [loss of exclusivity] profile is in the middle of the group, but the company’s new product cycle offering nearly fills the hole (we project 2026/2031/2035 sales of $100bn/$125bn/$117bn).” Shares of Johnson & Johnson have surged 49% over the past 12 months. The stock ticked higher after the upgrade. Most analysts covering the stock are bullish, with 15 of 28 giving it a buy or strong buy rating, per LSEG.
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