HSBC Global Research analysts upgraded Johnson & Johnson (NYSE:) stock from Hold to Buy on Thursday, highlighting “asymmetric risk and attractive upside even with our inbuilt conservatism.”
The analysts note that despite the fundamentals remaining stable, in their view, shares have fallen to three-year lows as they continue to face well-known headwinds, including pressures on growth due to patent expirations and the ongoing Talc litigation.
However, they believe the company’s size and quality offer stability, and they expect it to navigate the patent cliff without experiencing negative growth in any year.
Recent stock price weakness created a buying opportunity, HSBC says, “and the broad portfolio gives good visibility and we see numerous sources for upside to low expectations,” they added.
Potential risks to the firm’s views include the ongoing Talc litigation, which “could be more costly than expected and expected high oncology growth is dependent on Carvykti, which as a new modality carries additional risk,” analysts said.
Alongside a rating upgrade, HSBC raised the target price on JNJ from $169 to $170.
