UBS has upgraded Johnson & Johnson (NYSE:JNJ), citing a bullish view of the company's pharmaceutical business and expectations for MedTech growth that align with the market, which is mid-single-digit. 

At these current levels, with an undemanding valuation and apparent comprehensive consideration of talc risk, UBS regards JNJ as a leading diversified player in the healthcare sector.

UBS has upgraded the stock from Neutral to Buy with a price target of $180, up from $167, primarily driven by a more meaningful upside vs. consensus for the next few years.

Based on UBS analysis, anticipating a consistent influx of claimants entering the lawsuit each year for the next five years could potentially result in approximately $13 billion in a downside scenario. 

UBS says the Buy recommendation underscores the increased confidence in JNJ's potential to surpass consensus expectations in Pharma sales growth and achieve at least in-line MedTech growth over the next few years.

The optimistic outlook for Pharma primarily stems from the strength of already established drugs such as Darzalex, Stelara (where generic erosion may be overstated considering past precedent and upcoming launches), and Tremfya, which are undervalued.

Price Action: JNJ shares are up 1.20% at $156.52 on the last check Friday.