Johnson & Johnson shares finished at a record close above $275, extending their winning streak to seven straight sessions, according to market data. UBS analysts raised their price target on the healthcare giant to $320 per share from $280, pointing to an inflecting top-line growth rate and a shift toward higher-margin products. Jim agreed with the assessment, stating that the drug group has taken on momentum of its own as defensive stocks have been on a roll as the AI trade has hit turbulence.
UBS Growth Thesis and Multiple Expansion
Analysts at UBS detailed three primary catalysts driving their bullish outlook for Johnson & Johnson in a note to clients. Second, the firm anticipates potential multiple expansion as J & J transitions back to a growth stock and is rerated on the Street. Third, a strategic shift toward more higher-margin products is expected to bolster profitability.
Year to date, J & J is up 33%, compared to the S & P 500 ‘s 12% gain.
Pro Tip: When evaluating pharmaceutical investments, analysts closely monitor the timing of patent expirations, known as the loss of exclusivity, or LOE, which once that protection ends allows other companies to supply the market with lower-priced generic alternatives and drastically cut sales of the original drug.
Navigating Patent Timelines and Oncology Strength
Unlike many large pharmaceutical peers facing imminent patent expirations, Johnson & Johnson benefits from extended protections on major revenue drivers. Even then, UBS argued that it should be more of a patent “hill” than a cliff.
UBS expects Darzalex’s penetration to approach 80%, supporting $22 billion to $23 billion peak annual sales. “cancer business is not talked about enough,” Jim said, noting more attention on J & J’s oncology unit is important.
Immunology and Robotic Surgery Expansions
In J & J’s most recent second quarter, the drug saw overall sales growth of 71%.
Did You Know? (Jim Cramer’s Charitable Trust is long JNJ.
Frequently Asked Questions
What is Johnson & Johnson’s new price target set by UBS?
Analysts at UBS raised their price target on the healthcare giant to $320 per share from $280.
When does Darzalex lose its U.S. patent exclusivity?
Darzalex doesn’t lose U.S. patent exclusivity until 2029.