JNJ's Consumer Health Business Separation Will Remove Uncertainty Cloud From Company: Why This Analyst Wants Visibility

Guggenheim initiated the coverage on Johnson & Johnson JNJ with a Neutral rating and a $161 price target.
The analyst agrees with the company's decision to proceed with the Consumer Health separation and believes the MedTech segment is showing "reasonable" signs of recovery.
But it also notes the need for more visibility on the outlook of the Pharma business given an upcoming series of patent expirations.
The analyst said the consumer health separation would allow that business "to get the attention it needs and valuation it deserves." while allowing JNJ management to focus their efforts and resources on Pharma and MedTech.
Also Read: Johnson & Johnson-Backed Antiviral Candidate Effectively Prevents Influenza Infection.
Also, Guggenheim says that once the Consumer separation is complete, there will be more clarity on JNJ's ongoing talc litigation risk.
Regarding pharma, the analyst's 2025 sales estimates are around 10% below the management's estimate of $60 billion.
The analyst noted that while the Abiomed deal was expensive, it should help drive growth in MedTech. But it is unclear if the growth is sufficient to drive meaningful upside for JNJ' after the Consumer Health spinoff.
Price Action: JNJ shares are down 0.72% at $153.15 on the last check Wednesday.

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