Analysts have been keen to point out the positives on New York listed pharmaceutical and medical device giant Johnson & Johnson (NYSE:JNJ) in recent weeks.
Swiss bank UBS has repeated yesterday a 'buy' on the shares, targeting $148 for the shares, while broker Stifel says it's poised to accelerate growth in the second half.
It rates shares a 'hold' but has lifted the price target to $140 from $128 previously.
The group published its second quarter results in July this year. A small revenue miss of $110 mln was reported, with overall revenue coming in at $18.84 bln with a yoy (year-on-year) growth rate at 1.9%.
A UBS top pick..
But, nevertheless it is one of UBS's top picks.
Its analysts spent a day with chief executive Alex Gorsky - an event, which the bank said, reinforced its bullish view on prospects for sustained pharmaceutical growth, stable medical device and an improving consumer performance.
It reckons the market is not recognising the value of the company’s pipeline and sees the recent pullback of shares from July highs as an "attractive" entry point for investors.
With a solid pipeline to sustain above-market pharma growth, Johnson & Johnson's management remains confident in key growth drivers Darzalex and Imbruvica (cancer drugs), as well as expanding indications for Xarelto (blood clots) and Stelara (psoriasis), it said.
Growth expected in second half..
Looking at the pharma business, Stifel says the business seemed to perform within expectations and new second half launches are expected to accelerate growth.
"Importantly, Remicade sales seem to have held up better than feared against generics, down 5% rather than the 10-15% previously expected," it notes.
"We view Johnson & Johnson as a core healthcare holding and total return vehicle in any market environment for investors looking for safety and stability," says analyst Rick Wise.
But he reckons there could be more opportune entry points from both a timing and valuation standpoint for investors.
Pharma accoiunts for 45% of worldwide revenue.
Its pharma segment, which accounts for 45% of worldwide revenues and nearly 60% of operating income, remains critical for driving top-line growth and profitability, says Stifel.
"While the pharmaceutical market is facing a number of well-known headwinds including pricing pressure from increasingly cost-conscious parties to biosimilar competitor entrants, JNJ appears insulated, to some degree, with a robust multi-year pipeline of new drugs and line extensions," says Wise.
In medical devices, Stifel reckons ongoing portfolio management and external capital deployment could bolster the franchise’s trajectory.
"For consumer, additional key product recovery and stabilization could should boost recently sluggish top-line growth and provide opportunities for improving company-wide margins," it adds.
Shares are at $131.17 in New York - down 0.92%.