Johnson & Johnson's Robust Pipeline Supports Its Above-Average Valuation

3Q Review

Analyst David Toung noted that the company delivered strong third-quarter results, beating on the bottom line and upwardly revising its 2017 earnings per share guidance by $0.03 at the mid-point of the range. Dissecting the results, the analyst noted that pharma and medical device businesses showed solid growth in the third quarter.

Remicade Risk

Argus believes a biosimilar version of Remicade will have only a modest impact on Remicade sales. Pfizer Inc. PFE is set to launch Inflectra, the biosimilar in late November. Even if it has any, the firm believes Johnson & Johnson's robust pipeline that has the potential to deliver innovative new drugs could offset any possible slowdown in Remicade sales.

Related Link: Johnson & Johnson Delivers Another Earnings Beat

Raising Estimates, Reaffirming Rating, Price Target

Citing strong third-quarter results and the updated guidance, Argus raised its adjusted earnings per share for 2016 to $6.77 from $6.74 and that for 2017 to $7.08 from $7.05.

Argus reaffirmed its Buy rating and $145 price target on the shares of Johnson & Johnson.

At last check, the shares of Johnson & Johnson were down 0.42 percent at $114.92.

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