A Merrill Lynch analyst downgraded
Johnson & Johnson
on Friday, saying the company is facing a "myriad of issues."
Analyst Daniel T. Lemaitre said he thinks the health care company's dominance in the stent business will come under pressure after its Cypher coronary stent failed to launch. He added that competition from
will impact P/E expansion, though not likely the company's earnings. On this basis, he downgraded Johnson & Johnson to neutral from buy.
The stock was down 2.2% at $50.64 in morning trading, while Boston Scientific was up 44 cents at $63.67.
"Johnson & Johnson's reign as 'king of the hill' in stents may be short-lived since the animosity created by the 'botched' launch of the Cypher stent has interventional cardiologists salivating in anticipation of a next entrant," Lemaitre wrote in a research note. He did note that production on Cypher is increasing, which is good news for the company's sales and earnings in the near term.
But Boston Scientific's expected results on Sept. 15 from a pivotal study "will reinforce the perception that Johnson & Johnson's days are numbered," Lemaitre wrote. The FDA is currently reviewing Boston Scientific's Taxus stent.