Johnson & Johnson (NYSE: JNJ) may be one of the most well-known blue-chip stocks of all-time. It has many diverse brands and products in health care. It has a reasonable valuation for investors. Its dividend yield is over 3%, and it has raised its dividend for 63 consecutive years (let that sink in!). And despite all of that, J&J’s stock has spent the better part of the last five years on a round trip to zero for its stockholders.
Oggonomics is examining whether or not J&J is finally a good strategic stocks for investors. The company just had one of its most favorable earnings reports in years. Its stock has been stuck in a trading band of $145 to $165 for most of the last three-year period. And it is now long enough since the spinout of Kenvue Inc. (NYSE: KVUE) that it is easier to track as a healthcare player on a standalone basis.
J&J did please investors with its earnings report. Its most notable victory — despite economic concerns from trade, tariffs and a tapped consumer — was that J&J’s annual 2025 guidance was lifted to a range of $10.80 to $10.90 in adjusted earnings per share (versus a prior range of $10.50 to $10.70 per share). This was above Wall Street’s consensus and it represents a valuation of just under 15-times current year earnings.
It’s also not just earnings that went up. The company did warn that it could not predict what would ultimately happen with tariffs, but it did talk up the new U.S. tax policies creating American jobs and driving innovation. J&J raised its 2025 revenue forecast to a range of $93.2 billion to $93.6 billion (versus a prior $91 billion to $91.8 billion range).
Wall Street has decided to jump into the J&J momentum with multiple price target hikes just a day after the earnings report. Investors should keep in mind that the actual 6.2% stock gain in its earnings reaction was followed by profit-taking on day-two.
Here are the price target hikes seen in the 24-hour period since the earnings report:
- Johnson & Johnson was maintained as Neutral at BofA Securities, price target raised to $175 from $161
- Johnson & Johnson was maintained as Equal-Weight at Barclays, price target raised to $176 from $165
- Johnson & Johnson was maintained as Neutral at Guggenheim, price target raised to $167 from $164
- Johnson & Johnson was maintained as Equal-Weight at Morgan Stanley, price target raised to $176 from $171
- Johnson & Johnson was reiterated as Outperform at RBC Capital Markets, price target raised to $185 from $181
- Johnson & Johnson was reiterated as Buy at UBS, price target raised to $190 from $180
On July 10, Morgan Stanley had just maintained its Equal-Weight rating but its price target was raised to $171 from $169 in that pre-earnings call.
Wall Street has not been a big backer of J&J in recent years. The stock had a series of slightly lower-lows and lower-highs. The shares would need to rally another 5% before technicians can call for a major breakout, and even then it is never confirmed until that breakout actually proves to have been true.
Now there is a major coup that may be shaping up for J&J’s bulls. Raising earnings and revenue guidance in the light of tariffs and trade noise is impressive. A multi-year valuation low of under 15-times earnings estimates. A very favorable dividend payout ratio (and 63 years of dividend hikes). And an opportunity to keep making acquisitions or unlocking value in brands can always be in the works.
Investors should keep in mind that none of the analyst price target hikes above come with any assurances and no analyst report ever comes with money-back guarantees in the event of losses. Oggonomics does not maintain any formal rating nor price targets of its own regarding Johnson & Johnson.
