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Can Pfizer, Johnson & Johnson continue to outperform the index?

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Large capitalization drugs Pfizer Inc. (NYSE:PFE) and Johnson & Johnson (NYSE: JNJ) are among the stocks that have outperformed the broader market over the past year, particularly over the past three months. Both stocks are S&P 500 components, so a comparison to that index provides a suitable benchmark for pharma stocks.


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As the pharmaceutical industry languishes, these companies provide examples of company-specific news that can push prices even amid a broader slump.

Pfizer is up 6.69% in the last month and 9.78% in the last three months. Shares closed at $50.24 on Wednesday, a gain of $0.53 or 1.07%. That’s compared to the S&P’s return of 3.34% last month and a 1.15% decline over the past three months.

On Wednesday, a US district judge rejected tens of thousands of Pfizer claims GSK PLC (NYSE:GLC) and Sanofi S.A. (NASDAQ: SNY), regarding the treatment of heartburn Zantac caused cancer. The judge ruled that the claims failed to establish a legitimate link between Zantac and several cancers, including bladder, gastrointestinal, esophageal, pancreatic and liver cancers.

More cases are still pending across the country, but Wednesday’s ruling means the remaining trials will be in different state courts; the number of cases has dropped significantly.

Pfizer had more good news on Wednesday. According to the company, the U.S. Food & Drug Administration has accepted a Biologics License Application (BLA) application submitted by Pfizer for a candidate respiratory syncytial virus (RSV) vaccine for priority review. The treatment should prevent respiratory disease caused by that particular virus in people age 60 and older.

Priority review by the FDA shortens the standard BLA review period by four months.

In a statement from Pfizer, Annaliesa Anderson, senior vice president and chief scientific officer of vaccine research and development, said: “Because no RSV vaccines are currently available, older adults remain at risk for RSV disease and potentially serious outcomes, including severe respiratory symptoms, hospitalization and in some cases even death.”

She noted that the FDA’s acceptance of the BLA for the company’s vaccine candidate is an important regulatory milestone.

Pfizer has consolidated over the past year after peaking at $61.70 in December 2021.
Can S&P Components Pfizer, J&J Continue to Outperform the Index?

Johnson & Johnson also outperforms broader market

In addition to its pharmaceutical business, Johnson & Johnson is also diversifying into several healthcare businesses.

That stock is up 3.08% last month, 8.67% over the past three months and 6.17% since the start of the year. Shares closed $0.61 higher at $177.17 on Wednesday.

Johnson & Johnson has had recent news that has helped boost its share price. Last month, the company said it would acquire the cardiovascular device maker Abiomed Inc. (NASDAQ:ABMD) for nearly $17 billion. The deal is likely to accelerate J&J’s presence in a growing area, but J&J’s existing growth in appliances has lagged other areas.

The appliance area has now piqued investor interest, with Ra Medical Systems Inc. (NYSE:RMED) an almost astonishing 97.55% increase in the last week and 43.20% in the last month.

In September, privately held Catheter Precision announced a definitive merger agreement with Ra, which makes lasers for use in the treatment of vascular and dermatological conditions. If completed, the deal would result in a combined publicly traded company focused on cardiac electrophysiology, or the diagnosis and treatment of conditions that affect the electrical activity of the heart muscle.
Can S&P Components Pfizer, J&J Continue to Outperform the Index?

Lower price targets

Despite recent increases in stock prices, analysts are somewhat mixed when it comes to the short to medium term outlook for J&J. Since the company’s last earnings report in mid-October, five analysts have lowered their price targets for the company.

MarketBeat data shows that the consensus rating is “holding”. with a price target of $181.83, a potential upside of 2.74%. That’s lower than the $184.25 price target a month ago.

The Johnson & Johnson chart reveals a bowl-shaped pattern that started to form in late April. Currently, a possible buy point is above $188.69. So far, the correction is down 15% and has not undermined previous structural lows.

Since the 2020 COVID-19-induced market collapse, J&J has formed a series of bases with both higher highs and lower lows. Each time it failed to collect more than 20% before retreating again.

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