Normally when a stock turns its earnings per share (EPS) projections down a bit, that causes investors to get nervous and pull back. That didn’t happen for Johnson & Johnson (NYSE:JNJ), as it actually turned up a bit in Thursday morning’s trading session despite noting that its EPS figures would be a bit lower than expected.
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The issue of why the EPS picture is turning down may be what proved Johnson & Johnson’s saving grace. While Johnson & Johnson will, indeed, reduce both its 2023 and 2024 full-year projections, that’s mainly attributable to the acquisition of Laminar Inc., a medical device maker. Johnson & Johnson picked up Laminar for $400 million upfront and, with it, landed a set of devices geared toward treating non-valvular atrial fibrillation. The treatments help reduce the risk of a stroke down the line, so that should prove a welcome addition to Johnson & Johnson’s bottom line once the costs of buying Laminar have been recouped.
JNJ to Use AI to Make New Drugs
Johnson & Johnson isn’t just buying medical device makers. It also just hired several thousand new data scientists, with an eye toward putting them to work alongside artificial intelligence to make new drugs. Such a plan isn’t out of line, if a bit more ambitious than others we’ve heard about previously in this space; one idea is to use artificial intelligence as a means to test new drugs to see how they interact with certain conditions and even other drugs. It’s a way to do medical testing without actually having a live subject to test said medical advancements on. While it’s likely not a substitute for live subject testing, it can help iron out some kinks ahead of time.
Is JNJ Stock a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on JNJ stock based on seven Buys and eight Holds assigned in the past three months, as indicated by the graphic below. After an 11.22% decline in its share price over the past year, the average JNJ price target of $176.38 per share implies 14.16% upside potential.
