NEW YORK (TheStreet) -- Johnson & Johnson (JNJ) - Get Report stock is up 1.01% to $92.29 in pre-market trading after Deutsche Bank upgraded the company to "buy" from "hold," and maintained its $110 price target.
After meeting with management, analysts are more confident about its growth across all divisions.
Additionally, the company is one of the few to have a great credit rating of AAA.
"With $34 billion in cash and marketable securities and just $19 billion in debt, J&J is 'a master of its own destiny' free to pursue M&A and/or licensing opportunities to improve its growth profile and do so in the best interest of shareholders," analysts said.
However, one risk is patent expirations, according to the firm's note.
Separately, TheStreet Ratings team rates JOHNSON & JOHNSON as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
We rate JOHNSON & JOHNSON (JNJ) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels, expanding profit margins and growth in earnings per share. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- JNJ's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, JNJ has a quick ratio of 1.87, which demonstrates the ability of the company to cover short-term liquidity needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Pharmaceuticals industry and the overall market, JOHNSON & JOHNSON's return on equity exceeds that of both the industry average and the S&P 500.
- The gross profit margin for JOHNSON & JOHNSON is currently very high, coming in at 74.88%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.38% significantly outperformed against the industry average.
- JOHNSON & JOHNSON has improved earnings per share by 6.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, JOHNSON & JOHNSON increased its bottom line by earning $5.70 versus $4.82 in the prior year. This year, the market expects an improvement in earnings ($6.16 versus $5.70).
- You can view the full analysis from the report here: JNJ