Johnson & Johnson Prioritizes Sustainable Growth in M&A Amid Sector Diversification, Says Analyst

Wednesday, Johnson & Johnson JNJ reported a second-quarter adjusted EPS of $2.82, up 10.2% Y/Y, beating the consensus of $2.70.

RBC Capital Markets anticipates a favorable second-quarter environment for companies outside of China. They expect the third quarter to follow typical seasonal patterns without backlog issues, with robust MedTech markets projected for 2024 and beyond.

Johnson & Johnson maintains its consistent M&A strategy, affirming continuity even after acquiring Shockwave Medical. The company asserts confidence in its ability to explore diverse opportunities moving forward.

Johnson & Johnson has stated that while it is open to opportunities across all sectors and sizes, it prefers areas with existing expertise and capabilities.

It emphasized its long-term approach to mergers and acquisitions, prioritizing sustainable growth over short-term gains.

The RBC analyst adds that in the second quarter, both businesses showed sequentially increasing growth on a stacked 2-year basis, indicating improved fundamentals compared to the first quarter.

Johnson & Johnson anticipates faster sales growth in its Medical Technology sector in the second half of 2024. However, it foresees a slowdown in sales growth for Innovative Medicine, mainly due to the entry of a biosimilar for Stelara in Europe.

RBC Capital maintains the Outperform rating with a price target of $175.

Truist Securities says the management noted Imbruvica continues to experience competitive pressure, including Jaypirca, which was developed by Eli Lilly And Co LLY.

“In our view, this may reflect physician demand for novel options that can address resistance to older and less efficacious molecules such as Imbruvica,” Truist analyst writes.

Johnson & Johnson reports strong Tecvayli demand despite slower growth following FDA approval for a longer dosing interval. Pfizer Inc’s PFE Elrexfio allows biweekly dosing after week 24, contrasting with Tecvayli’s weekly dosing regimen.

This suggests a potential positive signal for Elrexfio. Meanwhile, attention is on Regeneron Pharmaceutical Inc’s REGN linvoseltamab, anticipated to offer a best-in-class profile with promising response rates (71% ORR and 46% CR or better).

Price Action: JNJ Stock is down 0.42% at $155.92 at last check Thursday.

Photo via Shutterstock