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New Brunswick, New Jersey-based Johnson & Johnson (JNJ) researches, develops, manufactures, and sells various products in the healthcare field. Valued at a market cap of $366.3 billion, the company operates through pharmaceuticals, medical devices, and consumer products divisions.
This healthcare giant’s shares have significantly lagged behind the broader market over the past 52 weeks. JNJ has declined 3% over this time frame, while the broader S&P 500 Index ($SPX) has gained 20.9%. Nevertheless, the stock is up 5% on a YTD basis, compared to SPX’s 1.9% rise during the same time frame.
Zooming in further, Johnson & Johnson has underperformed the Health Care Select Sector SPDR Fund’s (XLV) 3.8% return over the past 52 weeks and 7.2% gain on a YTD basis.
Johnson & Johnson’s weak performance over the past 52 weeks has been driven by several challenges, including slowing sales in its MedTech segment, particularly in China, patent expiration of its blockbuster drug, Stelara, and over 62,000 ongoing talc-related legal cases. Nonetheless, on Jan. 13, shares of JNJ surged 1.7% after the company announced plans to acquire Intra-Cellular Therapies for $14.6 billion. For JNJ, this acquisition is a good way to bolster its pipeline and strengthen its neurological business in the long run.
However, on Jan. 22, shares of JNJ plunged 1.9% after its Q4 earnings release, despite delivering better-than-expected Q4 adjusted earnings of $2.04 per share and revenues of $22.5 billion. The top line rose 5.3% from the year-ago quarter, while earnings declined 10.9% year-over-year. Strong growth in its Innovative Medicines unit, with sales of key drug Darzalex beating estimates, aided the results and overshadowed the decline in revenues from its key drugs, Stelara and Imbruvica. But what disappointed investors the most was its fiscal 2025 sales guidance. The company expects sales in the range of $89.2 billion-$90 billion, which came in below estimates.
For the current fiscal year, ending in December 2025, analysts expect JNJ’s EPS to grow 6% year over year to $10.58. The company’s earnings surprise history is promising. It surpassed the Wall Street estimates in each of the last four quarters.
Among the 22 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on eight “Strong Buy,” two “Moderate Buy,” and 12 “Hold” ratings.
This configuration is slightly more bullish than three months ago, with seven analysts suggesting a “Strong Buy” rating.
On Feb. 3, Jefferies maintained a “Neutral” rating on JNJ and raised its price target to $166, which indicates a 9.3% potential upside from the current levels.
The mean price target of $169.45 represents an 11.6% upside from JNJ’s current price levels, while the Street-high price target of $190 suggests an upside potential of 25.1%.
