While the consensus seems to underappreciate the trajectory of Johnson & Johnson's (NYSE:JNJ) Innovative Medicine business, Goldman Sachs says concerns around the Stelara loss of exclusivity appear overdone.
The Johnson & Johnson Analyst: Analyst Asad Haider upgraded the rating from Neutral to Buy, while raising the price target from $157 to $172.
The Johnson & Johnson Thesis: While the Innovative Medicine business contributes around 65% of the company's revenues, it accounts for 83% of profits, which is why it is "more important for the materiality of the stock," Haider said in the upgrade note.
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Although the Stelara exclusivity is around the corner, Johnson & Johnson has "numerous new product cycles across multiple large markets such as IBD, psoriasis, neuropsych, multiple myeloma, bladder cancer and EGFR mutated non-small-cell lung cancer," the analyst wrote.
Moreover, pharma stocks have historically troughed about a year ahead of a major loss of exclusivity, "which could bode well for JNJ if this pattern is followed," he added.
JNJ Price Action: Shares of Johnson & Johnson had declined by 2.91% to $145.63 at the time of publication on Wednesday.
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