Why J&J Is Poised to Outperform
While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.
What: Shares of Johnson & Johnson climbed nearly 2% today after Goldman Sachs upgraded the health-care giant from sell, to neutral.
So what: Along with the upgrade, analyst Jami Rubin boosted his price target on the stock to $95 (from $87), representing about 8% worth of upside to yesterday's close. J&J shares have slumped in recent months on slowing growth at its largest unit, medical devices and diagnostics, but Rubin believes that continued strength from the pharmaceuticals side could help fuel a comeback over the next 12 months.
Now what: Goldman now expects J&J to post EPS of $1.32 in Q3, and $5.48 for 2013, up slightly from its prior view thanks to the company's steady stream of new drug launches. "No company depicts this transformation better than JNJ's pharma business, in our view," noted Goldman. "With 70% of current sales leveraged to specialty/biologics and with most of JNJ's pipeline assets following the same pattern, we expect product mix to continue moving closer to biotech." When you couple those prospects with the stock's forward P/E of 15 and 3%-plus dividend yield, J&J's risk/reward trade-off really does look appealing.
More compelling income opportunities
Dividend stocks can make you rich. It's as simple as that. While they don't garner the notoriety of high-flying growth stocks, they're also less likely to crash and burn. And over the long term, the compounding effect of the quarterly payouts, as well as their growth, adds up faster than most investors imagine. With this in mind, our analysts sat down to identify the absolute best of the best when it comes to rock-solid dividend stocks, drawing up a list in this free report of nine that fit the bill. To discover the identities of these companies before the rest of the market catches on, you can download this valuable free report by simply clicking here now.
The article Why J&J Is Poised to Outperform originally appeared on Fool.com.Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.