Markets & Finance

CIBC World Markets Downgrades JNJ

Johnson & Johnson (JNJ) shares fell Wednesday even though the Food and Drug Administration said it supported approval for the Cypher drug-coated coronary stent made by JNJ's Cordis unit. CIBC World Markets downgraded JNJ shares to sector perform from sector outperform.

Analyst Mara Goldstein says the FDA approval confirms the EPS picture is bright, but JNJ's shares already reflect this. She says the panel stopped short of recommending Cypher be initially approved in lesion, artery lengths, but diameters were not part of SIRUS trial inclusion criteria. She believes this encompasses more than 60% of the stent market.

The company's biggest issue, Cypher's launch, comes as it needed to hide cracks in drug business and gain a lead on competitors. Although the fundamentals are solid, the shares are expensive, Goldstein says.

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