Pharmaceutical and medical technologies company Johnson & Johnson (NYSE:JNJ) is considering the acquisition of medical device maker Shockwave Medical (NASDAQ:SWAV), the Wall Street Journal reported. SWAV stock closed over 10% higher following this news.
Although the financial details of the potential acquisition are still unclear, the impact is likely to be substantial, given Shockwave’s market capitalization of approximately $12 billion. The report suggests that the deal could be finalized in the coming weeks, though there remains the possibility of it not materializing or another buyer emerging.
This move aligns with JNJ’s strategy of strengthening its MedTech division, which delivered over $30 billion in sales in 2023. Previously, the company acquired Abiomed for $16.6 billion and picked up Laminar, a medical device manufacturer. Additionally, JNJ has announced plans to restructure in order to enhance margins within its MedTech segment. This restructuring includes exiting specific markets and product lines within the orthopedic business. The company aims to complete this restructuring by 2025.
Is Johnson and Johnson Stock Expected to Rise?
Johnson & Johnson stock has gained about 5% year-over-year, underperforming the broader market. While the company is taking measures to accelerate growth in its MedTech division, the pressure on margins due to the unfavorable product mix and commodity inflation remains a short-term drag.
JNJ stock has seven Buy and six Hold recommendations for a Moderate Buy consensus rating. Analysts’ average price target on JNJ stock is $178.85, implying an upside potential of 14.82%.
