Maintaining Hold on JNJ: Anticipated EPS Beat Offset by Medtech and Currency Challenges

Johnson & Johnson (JNJ – Research Report), the Healthcare sector company, was revisited by a Wall Street analyst yesterday. Analyst Larry Biegelsen from Wells Fargo maintained a Hold rating on the stock and has a $163.00 price target.

Larry Biegelsen has given his Hold rating due to a combination of factors surrounding Johnson & Johnson’s financial outlook. While there is an anticipation that the company could surpass the consensus earnings per share (EPS) expectations for the second quarter, challenges such as currency headwinds and a potentially moderate growth in Medtech sales could weigh on the stock’s performance. Additionally, the expected increase in net interest expenses resulting from the financing of the SWAV acquisition is likely to impact earnings negatively, despite the deal being accretive to JNJ’s overall operating margin.
Furthermore, the report suggests that while JNJ may raise its 2024 sales guidance, largely due to the SWAV acquisition’s contribution, it is also likely to lower its EPS guidance for the year, factoring in the dilution from the acquisition and the increased foreign exchange headwinds. The potential for only modest upward adjustments in operational sales guidance and the forecasted operating margin improvement also contribute to the Hold rating, as these factors signal a cautious outlook on the stock’s near-term growth prospects.

In another report released on June 30, Morgan Stanley also maintained a Hold rating on the stock with a $167.00 price target.

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Johnson & Johnson (JNJ) Company Description:

Johnson & Johnson provides healthcare products across three segments: Consumer, Pharmaceutical, and Medical Devices. The Consumer segment includes products used in the baby care, oral care, beauty, over-the-counter pharmaceutical, women’s health, and wound care markets. The Pharmaceutical segment focuses on therapeutic areas such as immunology, infectious diseases ad vaccines, neuroscience, oncology, cardiovascular and metabolism, and pulmonary hypertension. The Medical Devices segment offers products used in the orthopedic, surgery, cardiovascular, diabetes care, and eye health fields. The company was founded by Robert Wood Johnson I, James Wood Johnson and Edward Mead Johnson Sr. in 1886 and is headquartered in New Brunswick, NJ.