Johnson & Johnson: Solid Fundamentals but Fully Valued with Litigation Overhang Supporting Hold Rating

Jason Gerberry, an analyst from Bank of America Securities, reiterated the Hold rating on Johnson & Johnson. The associated price target was raised to $221.00.

Jason Gerberry has given his Hold rating due to a combination of factors tied to both fundamentals and risk considerations. He modestly raised his sales and earnings projections following Johnson & Johnson’s solid fourth-quarter results, noting strength in key growth drivers like Tremfya, Darzalex, Erleada, and incremental improvements in Orthopedics and Vision, partially offset by weaker expectations for Stelara. His updated model led to only a slight increase in his price objective to $221 from $220, with no change to the valuation multiple, reflecting that much of the company’s growth profile appears already priced into the shares. He also highlighted management’s expectation for only modest operating margin expansion in 2026 and the lack of a longer-term margin outlook, which tempers enthusiasm about near-term upside.

Jason Gerberry’s rating is based on the view that Johnson & Johnson’s current valuation already reflects its relatively de-risked growth trajectory and favorable patent profile. He values the stock on a blended 17.5x P/E multiple of 2027 EPS, which he believes appropriately captures the company’s steady, but not dramatically accelerating, earnings outlook through the end of the decade. While he acknowledges that the pharmaceutical segment stands to benefit from limited major patent expirations until 2031, he remains cautious about the strength and visibility of the upcoming product cycle. In addition, he views the recent negative developments in the talc litigation as an overhang that contributes to uncertainty around potential future legal costs, reinforcing his decision to maintain a Neutral/Hold stance rather than move to a more bullish recommendation.

Gerberry covers the Healthcare sector, focusing on stocks such as Jazz Pharmaceuticals, Ionis Pharmaceuticals, and Teva Pharmaceutical. According to TipRanks, Gerberry has an average return of 15.5% and a 61.73% success rate on recommended stocks.

In another report released today, Barclays also maintained a Hold rating on the stock with a $217.00 price target.