Market price at the lowest point for the investment

Shares of Johnson & Johnson NYSE:JNJ they are the cheapest you will get. The stock is lower in pre-market trading after its first-quarter release, but there is a bottom in play and a reality to face. Trading at around $145, JNJ shares are valued at less than 14 times this year’s earnings guidance, which represents a deep discount to historical metrics. Add in the fact that the dividend yield is at the high end of the historical range, which has been increased again, and the odds are high that this stock will soon recover and resume its long-standing uptrend.

Johnson & Johnson’s mixed quarter is good news for investors

Johnson & Johnson had a mixed quarter, but in a way that should leave the market in good shape. The company reported net sales of $21.4 billion, up 2.3% from last year. Growth was as expected, which is good news given the number of moving parts within the company, but margin exceeded the consensus reported by Marketbeat.

Operationally, current activity grew 3.9% net of Kenvue NYSE: KVUE divided and adjusted by 7.7% for the impact of COVID-19; both are good numbers. U.S. sales offset foreign sales; in the United States they increased by 7.8%, while international sales decreased modestly. Medtech led the segment, good news for names like Abbott Laboratories NYSE: ABT AND Intuitive surgery NASDAQ:ISRGwith growth close to 6.5% followed by a 2.5% gain in Innovative Medicines.

The news on margins is good. The company was able to expand net margin and deliver solid GAAP and adjusted results. GAAP earnings of $2.20 reversed losses reported a year earlier, while adjusted $2.71 increased 12.4%. Adjusted earnings also beat Marketbeat.com’s consensus estimate of $0.06 and contributed to guidance.

Johnson & Johnson raised its revenue and earnings midpoint to bring revenue in line with consensus and earnings above it. Since the company is gaining momentum now, the guidelines could be updated later this year.

Johnson & Johnson analysts believe this stock is undervalued

Analysts at Johnson & Johnson believe this stock is undervalued because it is trading below the low end of their target range. The lower end of the range is 10% above the current price movement and the consensus adds another 1000 basis points of upside. The sentiment trend keeps the stock pegged at Hold, but the price target is up from last year and last month and is unlikely to reverse now. Analysts may not catalyze a rally, but they support a market floor that is unlikely to be broken. The latest revision is from Cantor Fitzgerald, who reiterates an Outperform rating and a price target of $215, the highest tracked by Marketbeat.

Johnson & Johnson’s dividend is one reason analysts hold this stock. The payout is closer to 3.25%, with shares near long-term lows, and has increased this quarter. The first-quarter report included a 4% increase in payments, which extends JNJ’s record to 62 consecutive annual increases. The payout ratio remains low at 45%, so annual increases are expected to continue indefinitely.

Oversold Johnson & Johnson falls to solid support

JNJ stock price action has fallen during pre-market action, but is already showing some signs of support. The market is at a critical level and will likely hold support if it does not recover. Assuming the market takes advantage of the opportunity, JNJ should start to recover soon. Otherwise, the market could remain at these levels until the end of the year. However, there is always a risk that the market will collapse through the critical support at the $145 level. In that scenario, JNJ stock could fall into the $120 to $135 range, but that is not expected.

Before you consider Johnson & Johnson, you’ll want to hear this.

MarketBeat tracks daily Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Johnson & Johnson wasn’t on the list.

While Johnson & Johnson currently has a “Hold” rating among analysts, top analysts believe these five stocks are better buys.

View the five stocks here

MarketBeat just released its list of 10 cheap stocks that have been overlooked by the market and may be seriously undervalued. Click the link below to see which companies are on the list.

Get this free report