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Johnson & Johnson – Upgrade to Buy: Pharma TIRADES to Drive EPS Growth & Dividend Momentum

— Jeff Holford, Equity Research Analyst, Pharmaceuticals

Jefferies upgraded JNJ shares to Buy as the firm believes that JNJ’s Pharma division is under-modeled by the Street and will drive above consensus revenue and EPS growth. After completing a deep dive analysis of the division, Jefferies found that a number of specific products could collectively make a significant difference to the growth outlook for the entire company. Jefferies currently forecasts that Pharma is likely to drive 52% of revenue and 65% of profit for JNJ by 2021. The majority of anticipated upside is expected to come from the oncology and immunology assets, as well as under-modeled Actelion synergies. Jefferies’ revised 2021 EPS estimate is now 12% ahead of consensus and the firm expects shares to re-rate to a market premium once the company’s diversified growth platform is fully recognized. FULL REPORT