Johnson & Johnson shares edged lower Wednesday after analysts said the company’s second-quarter results were solid but added that the health care giant’s stock is trading at a fair price.
THE OPINION: The New Brunswick, N.J., company said its profit more than doubled in the second quarter because of lower charges and higher sales for medicines and some medical devices. Johnson & Johnson’s results were better than Wall Street expected and the company raised its 2013 profit forecast slightly.
However Johnson & Johnson also said its sales growth is slowing down and it faces a variety of challenges like greater competition for medical devices and drugs and the difficult state of the economy. On Tuesday, the company’s stock reached an all-time high of $91.66.
Deutsche Bank analyst Kristen Stewart downgraded the shares to “Hold” from “Buy” Wednesday, saying the company’s pharmaceutical business and its pipeline of future drugs is strong, and Johnson & Johnson is on track to reach goals like rebuilding its over-the-counter franchise after a slew of product recalls and integrating Synthes, an orthopedics device company it bought for $19.7 billion in 2012.
However Stewart said those positive developments are now reflected in the company’s stock price. She raised her price target to $93 per share from $92.
Stifel Nicolaus analyst Rick Wise raised his full-year profit estimate to $5.45 per share from $5.40, saying Johnson & Johnson could continue to surpass estimates in the second half of the year. He said the pharmaceutical business is doing well and the over-the-counter unit is recovering, but the medical device business remains sluggish. He lowered his sales estimate because of unfavorable changes in foreign currency exchange rates, which hurt the company’s sales overseas.
Wise maintained a “Hold” rating.
Elsewhere, Jefferies & Co. analyst Jeffrey Holford kept a “Hold” rating on the stock and raised his price target to $95 per share from $92, and Barclays analyst C. Anthony Butler reiterated an “Overweight” rating while increasing his price target to $99 per share from $95.
THE STOCK: Shares of Johnson & Johnson lost 27 cents to $90.13 on Wednesday. The stock has climbed nearly 29 percent since the start of the year.