NEW YORK (AP) – A Goldman Sachs analyst said that investors are overlooking Johnson & Johnson’s product pipeline, upgrading the stock to “Buy” while downgrading shares of Bristol-Myers Squibb Co. to “Neutral.”

Analyst Jami Rubin swapped his ratings on the two stocks, saying upcoming Johnson & Johnson drugs like Zytiga, Xarelto, and Incivek will lead the way to better performance from its pharmaceutical business. Rubin said results from its medical device and diagnostics business have stabilized, and the company’s consumer business, which has been hurt by dozens of product recalls, has reached a low point.

Zytiga is a treatment for men with prostate cancer who have already gone through chemotherapy. The Food and Drug Administration approved it in late April, and Rubin said the New Brunswick, N.J., company will launch the drug soon. The company is waiting for regulatory decisions on Xarelto, which is intended to prevent strokes and other dangerous blood clots, and on Incivek, a hepatitis C drug discovered by Vertex Pharmaceuticals Inc. Johnson & Johnson will market Incivek in Europe if it is approved there.

“We still have confidence in Bristol-Myers Squibb’s pipeline, which we view as among the most innovative in the industry and with blockbuster potential,” Rubin said. “We simply see a better combination of catalysts and upside potential in Johnson & Johnson.”

The analyst said Bristol-Myers shares have benefited from successes including the first approval for its melanoma drug Yervoy, a new approval for its cancer drug Sprycel, and clinical trial results for its anticlotting drug candidate apixaban.

Rubin raised his price target on Johnson & Johnson stock to $77 per share from $64 and maintained a price target of $32 per share on Bristol-Myers, which is based in New York.

Date: May 11, 2011
Source: Associated Press