Summary
- Stock trades near the all-time highs.
- Company is facing legal headwinds in US.
- It reported better-than-expected earnings in Q3.
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I do not paint a portrait to look like the subject, rather does the person grow to look like his portrait. - Salvador Dali
Johnson & Johnson (NYSE:JNJ), the world’s biggest pharmaceutical company by market cap, has enjoyed a great end to the year after its stock hit a fresh 2019 high of $147.84 in the previous week. Despite the recent litigation, the company is well positioned to continue growing thanks to its impressive pharmaceutical portfolio.
Fundamentals
Most recently, the company has faced legal headwinds in the context of its alleged involvement in the opioid crisis. However, the latest test results released by the company show that J&J’s baby powder did not contain asbestos. Previously, the U.S. Food and Drug Administration studies showed that the product contained the material.
The tests that were conducted are part of a large-scale effort by J&J to prove the safety of its widely used consumer product after the test by the FDA prompted J&J to undertake a nationwide recall of one lot of Johnson’s Baby Powder in October.
A crisis involving baby powder didn’t stop the banking titan Barclays to upgrade the JNJ stock from “Equal Weight” to “Overweight”.
“In our view, litigation concerns are more than priced in and the risk/reward is attractive. We think J&J checks a lot of boxes heading into 2020, leaving risk/reward skewed to the upside.” said Kristen Stewart, an analyst at Barclays.
Furthermore, the bank raised the price target to $173. The stock closed yesterday's trading session at $145.30.
This is the second time J&J’s stock was upgraded in one week. Previously, Morgan Stanley analyst David Lewis made the same upgrade - from “Equal Weight” to “Overweight”, describing the company’s stock as an “attractive buying opportunity.”
Out of 19 analysts covering Johnson & Johnson, 13 have upgraded the stock to either Buy or Overweight.
