RBC Capital Markets initiated coverage on Johnson & Johnson (NYSE: JNJ) with a Buy rating, citing an appealing valuation after the spinoff of its consumer health division, Kenvue (KVUE). Analyst Shagun Singh sees value unlocked with the spinoff, which is likely to position JNJ as a unique healthcare company with Pharma and MedTech in one portfolio.
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The analyst believes that JNJ can monetize its 9.5% stake in Kenvue, which it has retained following its spinoff. RBC has forecasted mid-single-digit revenue growth for JNJ through 2024 and expects the company to return 60% of free cash flow to investors while also focusing on mergers and acquisitions. The analyst noted that currently, JNJ trades below historical price-to-earnings multiples despite its improved financial profile post-spinoff.
RBC has a price target of $178 on the stock, implying an upside potential of 13.6% from current levels.
Is JNJ Stock a Buy or Sell?
Analysts are cautiously optimistic about JNJ stock, with a Moderate Buy consensus rating based on six Buys and eight Holds.
