Leerink Upgrades Johnson & Johnson to Buy, Raises Sales Forecasts for Newly Launched Drugs

Leerink analysts upgraded Johnson & Johnson shares to a buy equivalent from hold on Wednesday, citing the company's slate of new drugs including Icotyde and Inlexzo. "Our thesis is that strong new drug momentum will drive accelerating revenue growth and stock outperformance," Leerink wrote in a note to clients.

The analysts raised their sales growth targets by 24-34 percent annually over the next five years and set a new price target of $265 per share for Johnson & Johnson, up from $252.

At the center of the thesis is Icotyde, an oral pill that launched in March for severe plaque psoriasis. The drug is also in phase 3 trials for the treatment of inflammatory bowel disease, which Leerink views as a potential catalyst in 2028. Analysts forecast $405 million in Icotyde sales for fiscal year 2026, 50 percent above the Street consensus of $268 million.

Leerink also highlighted strong initial patient demand for Inlexzo, which treats bladder cancer and launched in September. J&J CFO Joseph Wolk disclosed that Inlexzo's quarterly sales surpassed $30 million. Johnson & Johnson shares rose over 2 percent on Wednesday.

The stock is up 10 percent year to date, even as the Health Care Select Sector SPDR ETF (XLV) is down 9 percent. Johnson & Johnson shares are off roughly 4 percent from when the CNBC Investing Club initiated its position in early April. com reported that health-care stocks have been overlooked in an AI-driven market, making the upgrade something of an outlier.

Leerink's note arrives as the sector trades at a discount to broader indexes, with the upgrade reflecting confidence that Icotyde and Inlexzo can accelerate revenue in coming years. The analysts' higher sales projections for Icotyde reflect expectations of broader uptake beyond its initial psoriasis indication.

Phase 3 inflammatory bowel disease data expected in 2028 could further expand the drug's addressable market if successful.

Inlexzo's early quarterly sales exceeding $30 million were called a bullish indicator because J&J does not typically comment on quarterly sales of products during initial launches.