UBS Downgrades Johnson & Johnson (JNJ) to Neutral

(Updated - April 28, 2020 4:57 AM EDT)

(updating comment)

UBS analyst Kevin Caliendo downgraded Johnson & Johnson (NYSE: JNJ) from Buy to Neutral with a price target of $160.00 (from $163.00).

The analyst comments "JNJ has outperformed the SPX by 17% YTD and now largely discounts a scenario where 2021 and beyond returns to a normalized pre-COVID environment. We see risks to this view, particularly within the Medical Device and Pharma segments. Our new Revenue and EBIT estimates for 2021 and 2022 are 11% and 10% below our prior estimates and are now 2%+ below consensus. We acknowledge JNJ is considered a defensive stock (2.6% dividend, strong balance sheet), but we see a balanced risk/reward here (skew 1-1). The stock is trading near a historical high relative multiple on 2021, perhaps implying the market gives JNJ credit for future capital allocation. We believe JNJ can be a relative outperformer if the pandemic extends meaningfully into 2021 despite risk to consensus EPS, or if it does a value creating acquisition. We believe JNJ will underperform if the economy improves to the benefit of other more cyclical companies."

For an analyst ratings summary and ratings history on Johnson & Johnson click here. For more ratings news on Johnson & Johnson click here.

Shares of Johnson & Johnson closed at $154.29 yesterday.

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