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On Tuesday, Leerink Partners adjusted its stance on Johnson & Johnson (NYSE:JNJ) stock, downgrading it from Outperform to Market Perform. The firm also lowered its price target to $153 from the previous $169. The downgrade was prompted by Leerink’s revised expectations regarding potential price controls on Darzalex Faspro, a significant drug in J&J’s portfolio.
According to Leerink, there is a possibility that Darzalex Faspro could face price controls in 2029, five years earlier than previously anticipated. This adjustment stems from the drug’s initial approval in November 2015 and the subsequent approval of Darzalex Faspro in 2020. The firm had been projecting that Darzalex Faspro would generate $10.7 billion in U.S. sales in 2028, accounting for 16% of J&J’s worldwide pharmaceutical sales and 10% of the company’s total sales.
Leerink’s analysis suggests that Darzalex’s profit contribution in the U.S. could be around $8.6 billion in 2028, assuming an 80% operating margin. This would represent 22% of Leerink’s total operating profit estimate for Johnson & Johnson. However, the potential for earlier price controls poses a risk to these projections, as it could significantly reduce the drug’s profit contribution in the U.S.
The new price target and stock rating reflect Leerink’s updated investment thesis, which takes into account the revised growth outlook for Johnson & Johnson over the next five years. The firm’s reassessment indicates a more cautious view of J&J’s potential earnings growth due to the aforementioned concerns surrounding Darzalex Faspro.
In other recent news, Johnson & Johnson has announced promising results from its Phase 3 ICONIC-TOTAL study on icotrokinra, an investigational oral peptide for treating plaque psoriasis. The study revealed that 57% of participants achieved clear or almost clear skin at Week 16, with significant improvements noted in patients with scalp and genital psoriasis. Additionally, Johnson & Johnson’s TREMFYA® (guselkumab) demonstrated sustained clinical and endoscopic remission in patients with ulcerative colitis (UC) in its QUASAR long-term extension study at Week 92. The drug showed a strong safety profile and maintained remission rates, offering potential long-term benefits for UC patients.
In another development, the FDA has approved Johnson & Johnson’s IMAAVY™ (nipocalimab-aahu) for treating generalized myasthenia gravis (gMG) in patients aged 12 and older. This approval is based on data showing significant disease control and symptom relief. Furthermore, S&P Global Ratings has affirmed Johnson & Johnson’s ’AAA’ credit rating with a stable outlook, following the company’s acquisition of Intra-Cellular Therapies (NASDAQ:ITCI) Inc. for $14.6 billion. Despite ongoing talcum powder litigation, the company maintains strong financial policies and a diverse product portfolio. These recent developments reflect Johnson & Johnson’s ongoing efforts to expand its treatment options and strengthen its market position.
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