GO
Loading...

Enter multiple symbols separated by commas

What Goosed J&J Ahead of Pharma Pack

Johnson & Johnson was one of the few Dow components to rise Wednesday, boosted by three analyst upgrades and the closure of its $19.7 billion acquisitionof medical-device maker Synthes, The stock also vastly outperformed the rest of the large-cap pharma sector.

johnson_johnson2_logo.jpg
CNBC.com

J&J also orchestrated a creative way to buy back its own stock.

Its wholly-owned Irish subsidiary, Janssen Pharmaceutical, entered into an accelerated share repurchase agreement with Goldman Sachs and JPMorgan Chase, to purchase a total of 203.7 million shares of J&J common stock for $12.9 billion.

After holding a "neutral" rating on J&J for three-and-a-half years, analysts at JPMorgan upgraded the drug giant to "overweight," citing that J&J is a defensive mega-cap in a difficult market, it has an attractive dividend yield of roughly 4 percent, and promising assets in its pipeline including an experimental Alzheimer’s drug, bapineuzamab, in development.

JPMorgan also points out that shares of J&J are trading at a four-percent discount to its major pharmaceutical peers, perhaps signaling a good buy opportunity. During a time when investors are looking for return, J&J's fat dividend yield is quite attractive (currently at 3.9 percent), which is its highest level since July of 1984.

While analysts at Goldman said a breakup of J&J might generate higher returns, JPMorgan does not think this is possible. JP Morgan writes that following recent meetings with the J&J management team, a breakup of the company doesn’t seem to be in the cards.

Johnson & Johnson was also upgraded by Raymond James to "outperform" from "market perform," and at Jefferies to "buy" from "hold."

Questions? Comments? Email us at marketinsider@cnbc.com

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • Peter Schacknow

    Senior Producer at CNBC's Breaking News Desk.

  • Dominic Chu is a markets reporter for CNBC.

  • Evelyn Cheng

    Evelyn Cheng is a markets writer for CNBC.

  • Sara Eisen

    Sara Eisen is a correspondent for CNBC, focusing on currencies and the global consumer.

Market Strategist Survey