Leerink Partners Raises Price Target on Johnson & Johnson (JNJ) Following 4Q Earnings

Leerink Partners reiterated an Outperform rating on Johnson & Johnson (NYSE: JNJ), and raised the price target to $120.00 (from $115.00), following the company's 4Q earnings report. JNJ's 2015 EPS benefitted meaningfully from higher other income tied to divestitures. 2016 EPS estimate moves to $6.50 (+5%) from $6.40 previously, with better operating leverage and lower share count through buybacks offsetting ramping FX headwinds.

Analyst Danielle Antalffy commented, "For JNJ, 2015 EPS benefitted meaningfully from higher other income tied to divestitures, including the October sale of Cordis. But this incremental income was largely reinvested in the business, driving negative operating leverage as JNJ discretionarily ramped investment in both internal and externally partnered R&D programs which should set the stage for the company to drive steady sales growth acceleration back toward the mid-single-digit range and more in line with the company’s goal to grow at or above the broader healthcare markets. Now in 2016, with incremental investments in future growth drivers already made in 2015, JNJ is well-positioned to drive more meaningful positive operating leverage – the company is currently guiding to 200+ bps y/y. In Medical Devices specifically, 4Q15 saw positive sales growth trends that are likely to continue to improve in 2016 and beyond as that business returns to atmarket growth in the mid-single-digit range on the back of new product launches and the anniversary of recent divestitures that should help offset well-vetted headwinds across other businesses longer term."

For an analyst ratings summary and ratings history on Johnson & Johnson click here. For more ratings news on Johnson & Johnson click here.

Shares of Johnson & Johnson closed at $101.18 yesterday.

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