Johnson & Johnson Co. (JNJ) has seen slower growth over the past year but, in recent months, has shown its ability to outperform the S&P 500. Johnson & Johnson rose by approximately 10% compared to the S&P’s loss of about 10% over the past year. Hedge funds were buying in the first quarter, and this healthcare-focused holding company was added to the WhaleWisdom WhaleIndex on May 17, 2022.
Johnson & Johnson is an investment holding company that develops pharmaceuticals, medical devices, and consumer personal care goods. Johnson & Johnson has three business segments: Consumer, Pharmaceutical, and Medical Devices. Its Consumer segment is well known for products such as Band-Aid bandages, Neutrogena skin care products, and Johnson’s Baby products. Its Medical Devices segment is utilized across hospitals, retailers, and wholesalers. The Pharmaceutical segment focuses on vaccines, infectious diseases, oncology, pain management, contraception, and neurology, among other products.
Its company includes about 250 subsidiary companies with operations and sales worldwide, though its pharmaceutical business represents most of the sales revenue. The company engages in research and development through its pharmaceutical arm, Janssen Pharmaceutica. Johnson & Johnson announced in late 2021 that it plans to separate the pharmaceutical business from consumer products by late 2023. This significant change also comes amid ongoing legal challenges for the conglomerate related to its baby powder product. As the 2023 business changes approach, Johnson & Johnson appears focused on being a leader in the pharmaceutical and medical technology industries.
Mixed Actions from Institutions and Hedge Funds
Johnson & Johnson’s stock saw hedge funds buying in the first quarter, with the aggregate 13F shares held increasing to about 296.80 million from 296.77 million, a mild change of approximately 0.01%. Of the hedge funds, 32 created new positions, 216 added, 30 exited, and 200 reduced their positions. In contrast to hedge funds, institutions sold and decreased their aggregate holdings by about 0.9% to approximately 1.80 billion from 1.81 billion. Johnson & Johnson’s long-term 13F metrics between 2004 and 2022 show that the company remains on an upward growth trend for the stock price and funds helds.
Positive Earnings Estimates
Analysts expect to see earnings increase in 2022 and 2023, bringing earnings per share to $10.88 by December 2023, up from an estimated $10.26 for December 2022. Estimates are also encouraging for revenue, with an anticipated rise to approximately $96.5 billion by December 2022 and an estimated revenue of about $100.2 billion by December 2023.
Analysts Are Both Optimistic & Cautious
David Risinger of SVB Securities gave Johnson & Johnson an Outperform rating and a $200 price target, sharing expectations that the company will outperform the S&P 500 based upon consistent past earnings growth. Risinger is optimistic that the Medical Devices segment will continue to see sales growth in 2022 and 2023 and noted that Johnson & Johnson will exit from the Consumer segment in 2023. Citi analyst Joanne Wuensch gave Johnson & Johnson a Buy rating and lowered the firm’s price target to $205 from $210. Wuensch noted the impact of higher inflation and interest rates on the market, which is slowing growth for many companies and could also impact the medical technology industry.
Johnson & Johnson’s earnings estimates through 2023 are encouraging for investors. While growth may slow amid market volatility, the healthcare conglomerate and holding company has a strong track record of outperforming the S&P. Analysts appear bullish on the medical device and pharmaceutical businesses, and the stock’s trends suggest a long-term opportunity for investors.