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Asset Watch
Thursday, June 1, 2023
Johnson & Johnson underperformed the S&P 500 by nearly 7% in May. However, Citigroup analysts see a 20% upside and expect J&J to hit $185 after the spinoff of Kenvue. They wrote:
“What remains is world-leading medical technology and pharmaceutical franchises, which can focus R&D (and management energy) on respective pipelines while creating a more cohesive drug/device potential…. In other words, there is momentum at the new, streamlined JNJ.”
The stock’s long-term uptrend remains in place and we’re near levels that could elicit buying pressure. $154 is near the February to September 2020 highs, the January to November 2021 lows, and the early 2023 lows.
J&J’s 50-month MA has acted as long-term support since 2011. And if you analyse the candles, you can see that bullish reversals have occurred near this area. Therefore, with another iteration upon us, the risk-reward looks attractive, given the technical and fundamental setup.
Healthcare was one of the best-performing sectors in 2022, while technology was one of the worst. And while riding momentum can prove profitable, the former has shown the ability to perform in bull and bear markets.
So, does J&J deserve a look, or should you stick with the winners and roll with Big Tech?
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