Johnson & Johnson (JNJ) PT Raised to $204 as Goldman Sachs Sees S&P Discount Unwarranted

Goldman Sachs analyst Terence Flynn raised the price target on Johnson & Johnson (NYSE: JNJ) to $204.00 (from $201.00), slightly raising revenue/EPS estimates for the year after the company reported a 1Q beat noting two key points:

1) the momentum in pharma (particularly Darzalex SQ and Stelara in IBD) should continue

2) we were encouraged by management’s commentary on the ongoing recovery in Medtech (US business is back to ~90-105% of the pre-COVID levels). JNJ is trading at a P/E of ~17x/16x our new 2021/2022 EPS estimates and we continue to see the relative discount vs. the S&P500 as too wide

The analyst reiterated a Buy rating, stating "While we acknowledge the policy overhangs on the broader biopharma sector, we’d note that JNJ’s diversified mix offers more insulation from any potential changes to drug pricing. Near-term the focus for the stock is on the upcoming CDC ACIP meeting to review JNJ’s COVID-19 vaccine (following the completion of the EMA review on April 20), but we see this as more of a driver of sentiment vs. fundamentals given JNJ’s guidance that it would make the vaccine available on a not-for-profit basis during the pandemic. We update our model for the quarter and recent trends, and our price target goes to $204 from $201.

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