‘Historically cheap’ J&J a buy – Bernstein

Legal overhangs on the share price are overdone, says analyst Lee Hambright, noting a 13% decline from the 52-week high.

Settlements in the $50B range are a worst-case scenario, he says, yet are already priced in. A more likely range is $10B-$12B, he argues – $5B for opioids, $5B for talc, and $800M for Risperdal.

As for valuation, J&J (NYSE:JNJ) is trading at a 17% discount vs. a 12% premium to the S&P 500 at the end of last year – that’s almost two standard deviations below the long-term average.

He upgrades to Outperform and boosts his price target to $155 from $148. Shares are up 1.5% early to $131.

The Seeking Alpha Authors average rating is Bullish and the Quant Rating Neutral.

Previously: Bernstein sees 20% upside in J&J in premarket analyst action (Oct. 11)

https://seekingalpha.com/news/3505267-historically-cheap-j-and-j-buy-bernstein