Johnson & Johnson Seen As 'Safe Haven' By These Experts

• Johnson & Johnson JNJ shares have declined 13.28 percent year-to-date, from the high of $106.29 achieved on January 8.
• Deutsche Bank’s Kristen Stewart has upgraded the company to Buy, maintaining a price target of $110.
• Following meetings with the management, Stewart expressed confidence that the company was well positioned for growth across all its businesses, including pharma.

According to the Deutsche Bank report, “J&J has been active in portfolio mgmt, which we view positively. While it may have a few more small outbound transactions, inbound ones are now likely as its balance sheet capacity provides the opportunity to enhance growth.”

Analyst Kirsten Stewart also believes that the concerns regarding the growth outlook for the company’s pharmaceutical business have been overdone. Although some patent expirations and pipeline related risks could prove to be headwinds, Stewart expects the depth of Johnson & Johnson’s pipeline to “carry the company through.”

The company “expects to file more than 10 new molecular entities (NMEs) and more than 40 lines extensions by 2019,” Stewart reported, mentioning that two drugs that could turn into blockbusters were IMBRUVICA, which has already been approved, and daratumumab, which has been filed for approval.

“While JNJ’s MD&D and Consumer segments have seen modest growth as of late, we believe both are poised for improved growth given the portfolio rebalancing, new product launches, and resolution of division specific issues,” the report said.

In addition, Johnson & Johnson is one of the few companies with an AAA credit rating. Given that the company has $34 billion in marketable securities and cash and debt of only $19 billion, it is free to take on “to pursue M&A and/or licensing opportunities to improve its growth profile and do so in the best interest of shareholders,” Stewart added.

The EPS estimate for 2016 has been raised.