BofA Lifts JNJ Price Target to $278 on Sector Re-Rating
BofA Securities has raised its price target on Johnson & Johnson (JNJ) to $278 from $263, while maintaining a Neutral rating. This increase is based on BofA's updated model for recent in-process research and development charges. The new target applies 22x BofA's 2027 earnings estimate excluding those charges, up from 20.33x.
The firm tied this valuation to a sector re-rating for defensive stocks. For the third quarter, BofA expects J&J sales of $25.5 billion, in line with consensus, and EPS of $2.53, which is 12% below the Street's expectations.
BofA models 6% revenue growth, with Pharma up 7% and MedTech up 4%. The firm points to new launches and line extensions as key drivers, citing IQVIA data showing a significant increase in prescriptions for certain J&J medications. Additionally, J&J is reportedly in talks with Apollo Global Management (APO) over the potential sale of its orthopedics unit, which could be valued at nearly $20 billion.