) to buy from neutral.
Analyst Katherine Martinelli says although her 7% 2006 constant currency sales growth estimate (excluding Guidant) trails Johnson & Johnson's 10% target, she's 1% above consensus. She says she's more bullish with respect to earnings per share.
She notes with the benefit of repatriated earnings per share, an upward move in Johnson & Johnson since the Guidant deal was announced, she sees less 2005 earnings per share dilution tied to the acquisition. She believes it could add 9 cents to 2007 earnings per share.
Martinelli says although the company's current valuation represents a premium to big cap U.S. pharmaceuticals, Johnson & Johnson's sales and earnings per share growth outlook are well ahead of low single-digit gains projected for the group. She sets a $75 12-month target.