Investors find safety in J&J shares, but run could stall

(Reuters) – After lagging a 6-year healthcare sector run fueled by fast-growing biotech companies, Johnson & Johnson (NYSE:JNJ) shares have beaten the group in 2016 as investors turn to safety in rocky equity markets. But with the stock price now hovering near its $110.35 record high, that strategy may be in doubt. J&J shares already have risen to the level that the average analyst has targeted for them, and sell at a healthy premium to large pharmaceutical companies such as Pfizer (NYSE:PFE) and Merck (NYSE:MRK). Relative to their own future earnings, the shares are more expensive than they have been in more than a year. “What I am more concerned at this juncture is, do we see more follow-through or do we see profit taking?” said Arthur Henderson, portfolio manager of the global healthcare equity fund at the Tennessee Consolidated Retirement System, where he has recently sold some J&J shares so they account for a smaller part of the fund’s holdings. J&J shares could build on their gains if investors rekindle worries about the broader economy or continue to hide from concerns facing the pharmaceutical and biotech industries, and some analysts are optimistic about the company’s pipeline of experimental medicines. But, ultimately, the company will have to produce enough earnings growth to justify the higher prices. On that front, the company faces a fresh competitive threat to its biggest drug franchise. U.S. regulators earlier this mon...
Source: Mass Device - Category: Medical Equipment Authors: Tags: Business/Financial News Johnson & Johnson newtag Source Type: news