Johnson & Johnson’s JNJ stock price is on the move again, showing signs of a resurgence. After stumbling in recent years due to the fallout from the COVID-19 pandemic and the spin-off of Kenvue KVUE, the company now presents a compelling investment opportunity. With promising value, lucrative dividends, and a positive growth forecast, Johnson & Johnson is deemed a buy aimed at delivering solid returns by 2025 and beyond.

This healthcare giant trades at 16 times this year’s earnings, significantly below its historical average and the S&P 500 benchmark. Additionally, Johnson & Johnson offers a dividend yield exceeding 3%, more than double the overall market average, which indicates a strong potential for sustained income over the coming years.

Q3 2024 Marks a Turning Point for Johnson & Johnson

In the third quarter of 2024, Johnson & Johnson began to show signs of recovery, demonstrating operational growth that outperformed previous years. Analysts expect this positive momentum to carry into the fourth quarter and into 2025.

The company reported a 5.2% year-over-year increase in revenue, buoyed by strong performance in various regions and business segments. Operational growth reached 6.3%, and when adjusted for COVID-19 impacts, the U.S. sales grew 7%, while international sales rose 4.6%. Notably, the Internal Medicine and Medical Technology segments saw near 6.35% growth, driven by established treatments and new product launches during the quarter.

Profit margins presented a mixed picture, but overall, they were reasonably favorable to investors. While acquisition-related costs, including IPRD expenses, impacted GAAP and adjusted profit margins, the negative effect was less than anticipated. Even with these costs, adjusted earnings per share (EPS) exceeded expectations by 950 basis points.

Company guidance has shown a favorable trend for shareholders. Johnson & Johnson raised its revenue forecast, attributing this to organic growth and the V-Wave acquisition’s effects. However, the earnings target has been slightly lowered. The essential takeaway is that revenue is projected to surpass analysts’ expectations, indicating enough strength to maintain a healthy capital return program. The dividend remains solid, complemented by significant share buybacks, reducing the share count by 4.7% in the quarter and 6.6% year-over-year.

Institutional Activity Signals a Floor at $145 for Johnson & Johnson

Institutional and analyst movements over the last year have been varied, marked by sporadic selling and negative outlooks. However, 2024 has seen a shift towards institutional buying, particularly around the $145 price level, which aligns with the lower end of analysts’ price targets. This institutional activity may provide positive support as the market continues through the fourth quarter.

Analysts are also becoming more optimistic. Early October saw two reiterations of Outperform ratings with price targets exceeding consensus estimates reported by MarketBeat.com. The average target of $175 indicates a potential 5% upside, with substantial room for further gains, as the higher predictions add almost $40, translating to nearly 25% upside.

The technical outlook appears positive. The JNJ stock market has been trading within a multiyear range, yet currently shows signs of upward movement. Recent trends suggest the potential for further gains, with expectations that JNJ may climb towards $180 by early 2025.

The article “Johnson & Johnson Stock: Setting the Stage for 2025 Highs” first appeared on MarketBeat.