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Investing.com -- Wells Fargo upgraded Johnson & Johnson to Overweight from Equal Weight in a note on Friday, citing attractive valuation and greater confidence in the company’s pharmaceutical growth outlook.
The bank also raised its price target for the stock to $212 from $170, based on 17.5x estimated 2027 earnings per share of $12.09.
“JNJ’s NTM P/E is at a nearly 30% discount to the S&P 500 vs. its 20-yr avg discount of 5%,” Wells Fargo wrote, noting the stock also trades below its five- and ten-year averages relative to the index.
The analysts said this presents “an attractive entry point” given easing tariff and pricing risks and investor confidence in Johnson & Johnson’s ability to grow through the Stelara loss of exclusivity.
Wells Fargo pointed to the recent Pfizer deal on U.S. drug pricing as a sign that “similar deals” are likely for other pharmaceutical companies.
Johnson & Johnson has committed $55 billion of U.S. R&D and manufacturing investment over the next four years, alongside $2 billion in North Carolina to expand pharma manufacturing.
“JNJ’s goal is to make in the U.S. all its advanced medicines sold in the U.S.,” the note said.
The firm also highlighted management’s guidance for stronger long-term growth. “We see potential upside to Pharma outlook,” Wells Fargo wrote, estimating “nearly $3B in total potential upside to current 2027 consensus.”
Using Johnson & Johnson’s internal estimates, Wells Fargo forecasts a 2025–2030 pharma sales CAGR of 7.7% versus Street expectations of 5.0%.
The analysts concluded: “If JNJ’s Pharma business grew at a 7.0% CAGR between 2025-2030, this would represent upside to consensus of almost $8B in 2030 or 6%.”