Wells Fargo downgraded Johnson & Johnson (NYSE:JNJ) from Overweight to Equal Weight on Wednesday, also reducing the stock’s price target from $170 to $163 per share. The downgrade is due to expectations of subdued earnings growth for JNJ in the coming years. This anticipated slowdown is largely attributed to the upcoming loss of exclusivity (LOE) for Stelara, one of JNJ’s key products.
The analysts noted that Stelara, which is set to face LOE outside the United States in mid-2024 and in the U.S. in early 2025, is a major contributor to JNJ’s financial performance. It is estimated to account for approximately 13% of JNJ’s total sales and about 24% of its total operating income in 2023.
Wells Fargo anticipates that the LOE for Stelara will pose significant challenges to JNJ’s earnings per share (EPS) growth in the next few years. This is a shift from JNJ’s historical trend of targeting EPS growth faster than sales growth. The firm now expects JNJ to align EPS growth with sales growth.