Johnson & Johnson Analysts Laud Accelerating Pharma Business

Pharma giant Johnson & Johnson JNJ hosted a review of its pharmaceutical businesses Wednesday, and analysts came away largely impressed.

The Analysts

Morgan Stanley analyst David Lewis maintained an Equal-weight rating on Johnson & Johnson with a $145 price target.

BMO Capital Markets analyst Joanne Wuensch reiterated an Outperform rating and $157 price target.

Morgan Stanley: J&J Story Looks Brighter

J&J expressed confidence in the acceleration of its pharma business in 2020, with the segment likely to see above-market growth through 2023, Lewis said in a Thursday note.

The analyst models about 7-percent growth for the segment in 2020, up from 4-percent growth in 2019.

The acceleration is premised Johnson & Johnson emerging from 2019 headwinds, increased pipeline contributions, indication expansion for current blockbuster franchises and the absence of any major patent/exclusivity expirations in the near-term, Lewis said. 

"2019 could see a near perfect storm of Pharma headwinds but moving past these, acceleration is likely and could drive stock performance," the analyst said. 

J&J expects at least 10 new blockbuster approvals and filings from 2019-2023 — including the recently launched Spravato and Balversa — and 10 potential 2019-2023 filings, according to Morgan Stanley. 

"In addition to this, the company highlighted at least 40 line extensions for current franchises, including over 10 with $500mn potential," Lewis said. 

Morgan Stanley expects consensus estimates to move higher for the stock. 

See also: The Daily Biotech Pulse: FDA Nod For Roche, Trial Results For Agios, Iovance And MacroGenics

BMO: J&J Continues To Innovate

J&J's discipline to acquire and divest assets in its health care portfolio, its pristine balance sheet and its high dividend yield make the stock a strong defensive choice, Wuensch said in a Wednesday note. 

The following are the analyst's key takeaways from the event:

• Stelara is the company's largest asset, contributing in the psoriasis and Crohn's disease markets.
• Tremfya, a selective IL 23 inhibitor for psoriasis, is delivering more than $500 million in global sales in its first year.
• Darzalex is redefining multiple myeloma treatment, including combo therapies.
• Imbruvica is defining a new standard-of-care in chronic lymphocytic leukemia.
• J&J is leveraging its Actelion acquisition for pulmonary hypertension management.
• The recently approved Spravato has a vast market opportunity in treatment-resistant depression.

"Despite the concerns of pricing pressure and generic and biologic competition, J&J continues to do what it does best, innovate," Wuensch said. 

The Price Action

J&J shares, which have gained roughly 7 percent year-to-date, were trading up 1.04 percent at $138.31 at the time of publication Thursday. 

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Photo courtesy of Johnson & Johnson.