Johnson and Johnson stock forecast: a positive outlook?
Higher revenue in 2021 and the positive demand outlook this year boosted healthcare group Johnson and Johnson’s (JNJ) share price over the past week.
The medical device maker and pharmaceutical group’s shares, traded on New York Stock Exchange (NYSE), rose to $168.38 on 26 January, up 1.1% from $166.58 on 19 January. Despite the gain over the past week, the JNJ stock price was 1.8% below where it was at the beginning of the year.
Are you interested in learning more about the outlook for the healthcare group? Read this Johnson and Johnson stock analysis for the latest news and analysts’ JNJ stock forecast before making your investment decision on JNJ shares.
Rising sales and net earnings in 2021
Johnson and Johnson reported rising sales and net earnings in 2021 in its financial results released on 25 January 2022. JNJ’s sales in the fourth quarter last year increased to $24.8bn, up 10.4% compared to Q4 2020. Full-year 2021 sales grew by 13.6% year-on-year (YoY) to $93.78bn.
The group’s net earnings surged to $4.7bn, nearly triple the $1.7bn seen in Q4 2020. Full-year 2021 net earnings jumped by 41.9% YoY to $20.9bn.
As a result of these higher earnings, Johnson and Johnson has declared a cash dividend of $1.06 per share on the company’s common stock for the first quarter of 2022. The dividend is payable on 8 March 2022.
JNJ’s pharmaceutical segment accounted for more than half (55.5%) of total sales in 2021, followed by medical devices at 28.9% and consumer health at 15.6%.
Medical devices
Medical device sales registered the biggest growth last year, increasing to $27.1bn, up 17.9% compared to 2020. According to JNJ, the increase in sales was “driven primarily by the market recovery from Covid-19 impacts and the associated deferral of medical procedures in the prior year across all of our businesses including Surgery, Interventional Solutions, Vision and Orthopaedics.”
Pharmaceutical
Pharmaceutical sales also rose by 14.3% YoY to $52.1bn in 2021, but were partially off-set by falling sales of Remicade (infliximab), a drug for the treatment of a number of immune-mediated inflammatory diseases.
The group attributed the growth to several of its drugs, including Darzalex (daratumumab), for the treatment of multiple myeloma, Stelara (ustekinumab), for the treatment of a number of immune-mediated inflammatory diseases, Tremfya (guselkumab), for the treatment of plaque psoriasis, and for adults with active psoriatic arthritis, Erleada (apalutamide), for the treatment of patients with prostate cancer, and Invega Sustenna, Xeplion, Invega Trinza and Trevicta (paliperidone palmitate), which are all anti-psychotics for the treatment of schizophrenia.
Sales of the Janssen Covid-19 vaccine also contributed to the sales upturn.
Consumer health segment sales climbed by 4.1% YoY to $14.6n in 2021, but “the growth was partially offset by external supply constraints mainly impacting Skin Health/Beauty,” said JNJ.
Nonetheless, the sales increase was “primarily driven by over-the-counter (OTC) products including Tylenol analgesics and digestive health, in addition to Neutrogena and Aveeno products in Skin Health/Beauty, primarily due to Covid-19 market recovery”.
Full-year 2022 guidance
The group expects reported sales in 2022 to rise to between $98.9bn and $100.4bn, which would be an increase of 7% to 8.5% compared to the previous year.
Sales of the Covid-19 vaccine are expected to generate $3bn to $3.5bn this year.
Baby powder lawsuits, subsidiary bankruptcy
Following waves of litigation claims against Johnson and Johnson’s baby powder products, with claimants alleging the asbestos in the talcum powder caused cancer, JNJ spun the product off into a subsidiary named LTL Management LLC. The subsidiary filed for Chapter 11 bankruptcy protection in October 2021.
According to the firm: “This action was taken to resolve all claims related to cosmetic talc in a manner that is equitable to all parties, including any current and future claimants.”
JNJ has allocated royalty revenue streams with a value of over $350m to contribute to potential costs of the bankruptcy and help resolve the cosmetic talc cases.
However, a group of bankruptcy law professors have filed papers to get the bankruptcy application thrown out, according to a report published by Reuters.
The group argued that JNJ should not be permitted to use bankruptcy to protect itself against talc-related legal liabilities when the group is in strong financial health. The case hearing on the motion to dismiss is scheduled for 2 February.
On 13 December 2021, the US Supreme Court dismissed JNJ’s attempt to halt an upcoming trial in the state of Mississippi’s lawsuit over the company’s failure to warn consumers of a possible link between its talcum powder and ovarian cancer.
Is JNJ a good long-term investment?
With JNJ’s existing legal liabilities and the upcoming court hearings, many investors questioned if the healthcare group is a good long-term investment. Most analysts remained confident in JNJ’s financial performance in the near-term, as the demand outlook for its Janssen Covid-19 vaccine remained robust.
“Much of J&J's growth will likely come from products other than its Covid-19 vaccine. Excluding those vaccine sales, the company looks for revenue to increase between 5% and 6% this year,” wrote Keith Speights on investment guide website The Motley Fool on 25 January.
“The Covid-19 pandemic will likely continue to rank as the biggest factor impacting Johnson & Johnson for now. Assuming there is no significant disruption to physicians and hospitals going forward, J&J should be able to keep its momentum going,” said Speights.
(Note that Speights does not have any position in JNJ stocks.)
According to Market Beat, six out of nine Wall Street analysts surveyed had a “buy” consensus rating for JNJ stocks while three recommended “hold” for the period up to 27 January 2022.
The average 12-month JNJ stock price target was $187.40 with a 10.13% upside potential, above the all-time high of $179.47 seen on 17 August 2021.
In a positive scenario, analysts forecast the JNJ share price could reach $200, while it could also fall to $161 in a negative scenario.
According to the JNJ technical analysis on Investing.com, the stock had a “strong buy” recommendation based on its moving averages and technical indicators.
Johnson and Johnson stock prediction
Forecast data provider AI Pickup’s forecast for JNJ stock price was bullish for the next 10 years, as it expected the healthcare group’s share price to exceed the 2021 record high of $179.47.
AI Pickup expected the average JNJ stock price to be $215.65 in 2022. The site said the JNJ share prices could exceed $250 next year, with an average price of $269.53 in 2023, $259.94 in 2024, $267.41 in 2025, $267.92 in 2026, $262.98 in 2027, $246.29 in 2028, $230.15 in 2029 and $197.04 in 2030.
A second analyst, Wallet Investor, forecast the JNJ stock price to rise to $174.30 in the next 12 months, rising to $226.64 by 2026.
When looking at the JNJ future stock price, it’s important to bear in mind that analysts’ forecasts and price targets can be wrong. Analysts’ JNJ stock price predictions are based on making fundamental and technical studies of the stock’s performance. Past performance is no guarantee of future results.
FAQs
Is Johnson and Johnson stock a good buy?
Several analysts believe that Johnson and Johnson stock is a good buy because of the forecasted rising earnings and positive demand outlook for its Janssen Covid-19 vaccine.
However, whether it is a good buy or not will depend on your investing goals and portfolio composition. You should do your own research and never invest what you cannot afford to lose.
Will Johnson and Johnson stock go up?
Some analysts’ forecasts expect Johnson and Johnson’s share price to go up in the next five years. However, analysts' forecasts can be wrong.
You should do your own research and never invest any money you cannot afford to lose.
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