Johnson & Johnson rated new Buy at RBC

RBC Capital Markets analysts initiated research coverage on Johnson & Johnson (NYSE:JNJ) with an Outperform rating and a price target of $178 per share.

“JNJ is a global healthcare company uniquely positioned with Pharma and MedTech under one umbrella,” they wrote in an initiation note on the stock.

According to RBC, the company has capitalized on its potential through the separation of its consumer segment, positioning itself to achieve the following two objectives:

1) The pharmaceutical franchise is poised for robust growth, with a promising pipeline that includes over five candidates with the potential to generate over $5 billion in revenue and 12 candidates with the potential to exceed $1 billion in revenue. Additionally, the company has more than 65 filings expected between 2026 and 2030; and

2) JNJ’s medical technology division is set to become a top-performing segment, driven by a portfolio shift and a focused approach to innovation.

“JNJ is attractively valued and poised to deliver MSD revenue growth with 1.5-2.0x leverage to EPS while returning 60% FCF to shareholders while keenly focusing on M&A,” the analysts added.

The price target implies a 17% upside potential.

JNJ shares are down 12% year-to-date.