Morgan Stanley upgraded Johnson & Johnson (JNJ) to Overweight from Equal-Weight on Wednesday, noting that the New Brunswick, New Jersey-based pharma giant sits in a “higher growth” group relative to its peers.
Analyst Terence Flynn projects the company’s revenue and earnings per share to record a ~5.5% and 12% CAGR over 2026-2030, respectively, indicating a favorable growth outlook compared to its biopharma rivals and positioning JNJ “in the ‘higher growth’ cohort.”
The analyst raises his estimates for key J&J (JNJ) products Tremfya, Icotyde, Tecvayli, and Darzalex, and argues that JNJ’s patent cliff is “in the middle of the group, but the company’s new product cycle offering nearly fills the hole.”
Flynn raised his price target on the stock to $262 from $200 per share, noting that J&J (JNJ) is trading at a ~3x discount to the S&P 500 (SP500). The benchmark index trailed the company by nearly 30 percentage points last year.
The analyst opined that further expansion to JNJ’s multiple is unlikely but added, ”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.”