Morgan Stanley Sees More Focused Device Strategy Continue for Johnson & Johnson

In a report published Friday, Morgan Stanley analyst David R. Lewis reiterated an Equal-Weight rating on

. In the report, Morgan Stanley noted, “The Wall Street Journal is reporting that J&J is seeking a buyer for Cordis, a material component of its Cardiovascular business. The decision follows recent moves to prioritize its medical device portfolio following 3-4 years averaging ~1% organic growth. Most recently, J&J sold its Ortho-Clinical Diagnostics (OCD) segment to Carlyle Group for ~$4bn. The OCD business was a headwind with negative organic growth. We estimate Cordis is a flat to declining business for J&J, with margins below the company average. Recent actions follow the promotion of the Biosense Webster management team to run Cardiovascular and Pharma executives taking a more active role in overseeing Device innovation. Trimming lower growth, less innovative assets, such as OCD and Cordis, will help the overall growth profile of the Device segment. In our view, management remains interested in certain segments of the device market but we would not see this potential action as a signal they are looking to aggressively expand the device footprint with large, low return M&A. The company has not commented on this report.” Johnson & Johnson closed on Thursday at $102.95.