Johnson & Johnson stock price forecast: RBC analyst sees a 15% upside

Johnson & Johnson (NYSE: JNJ) is trading just above its year-to-date low at writing – which creates an opportunity to invest in a quality name at a discount, as per an RBC Capital Markets analyst.

Johnson & Johnson stock could climb to $178

Shagun Singh initiated the healthcare giant this morning with an “outperform” rating. Her $178 price objective suggests a 15% upside from here.

The analyst sees potential in Johnson & Johnson stock now that the consumer health segment (Kenvue) has been separated. Her research note reads:

JNJ’s value-accretive consumer separation positions it uniquely as the only global healthcare company with Pharma and MedTech under a single portfolio.

She’s convinced that the separation will help in terms of both innovation and productivity. JNJ is expected to earn $2.52 a share in its current financial quarter versus $2.55 per share a year ago.

The Biden admin has announced, in an historic first, major drug companies including Johnson & Johnson, Merck and Bristol Myers Squibb have committed to participate in Medicare drug price negotiations with the federal government.

— Kyle Griffin (@kylegriffin1) October 3, 2023

Johnson & Johnson pays a dividend as well

Johnson & Johnson still has a 9.5% stake in Kenvue that it can monetise, as per the RBC analyst. Johnson & Johnson is better positioned to improve its margins after the separation, she added.

Shagun Singh also told clients in her research note today that Johnson & Johnson has five therapies with potential for over $5.0 billion in revenue and another 12 therapies worth more than $1.0 billion (potentially).

She’s constructive on JNJ also because its medtech division has a “clear winning strategy”.

We believe health is everything. That’s why we’re harnessing our expertise in Innovative Medicine and MedTech to tackle the world's toughest health challenges. 🔬 Explore how.

— Johnson & Johnson (@JNJNews) September 14, 2023

Johnson & Johnson stock currently pays a dividend yield of just over 3.0% which makes up for another good reason to have it in your investment portfolio.