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Acquisition Watch: Time to Buy Johnson & Johnson (JNJ) or ShockWave Medical's (SWAV) Stock?
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News of healthcare behemoth Johnson & Johnson (JNJ - Free Report) acquiring medical device company ShockWave Medical (SWAV - Free Report) made headlines this morning. The acquisition is expected to be completed later this year and is valued at $13.1 billion or $335 a share and 3% above ShockWave's current stock price.
ShockWave’s stock is up 2% in Friday’s trading session with Johnson & Johnson shares virtually flat and trading at $152 a share. With that being said, let’s see if it’s a good time to buy stock in either of these healthcare leaders.
Image Source: Zacks Investment Research
Acquisition Overview
As one of the most diversified large-cap pharmaceutical companies, Johnson & Johnson has a pipeline of multi-million-dollar drugs covering a broad range of areas including neuroscience, cardiovascular and metabolism, immunology, oncology, hypertension, and infectious diseases.
Acquiring ShockWave will likely boost Johnson & Johnson’s MedTech segment which includes interventional solutions. To that point, ShockWave develops and commercializes intravascular lithotripsy (IVL) technology and products that are created to change the way calcified cardiovascular disease is treated.
Notably, Johnson & Johnson brought in $93.02 billion in sales in 2023 and has a market cap of $367 billion with ShockWave bringing in $730.23 million in sales last year and having a market cap of $11.8 billion.
Image Source: Zacks Investment Research
Growth & Outlook
This year Johnson & Johnson’s total sales are expected to dip -5% to $88.35 billion. However, fiscal 2025 sales are expected to rebound and rise over 2% to $90.6 billion. More importantly, annual earnings are projected to be up 7% in FY24 and are pegged to rise another 3% in FY25 to $10.97 per share.
Image Source: Zacks Investment Research
Pivoting to ShockWave’s outlook, total sales are forecasted to climb 26% in FY24 to $921.19 million. Plus, FY25 sales are projected to leap another 22% to $1.12 billion. ShockWave’s annual earnings are expected to soar 27% in FY24 to $4.89 per share compared to $3.85 a share last year. Even better, FY25 EPS is projected to jump another 27%.
Image Source: Zacks Investment Research
Bottom Line
ShockWave’s stock currently sports a Zacks Rank #2 (Buy) given its attractive growth trajectory and the implied upside to its acquisition price. As for Johnson & Johnson, its stock lands a Zacks Rank #3 (Hold) as the healthcare giant’s current outlook isn’t overwhelming but acquiring ShockWave could certainly propel its top and bottom lines down the road.
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Acquisition Watch: Time to Buy Johnson & Johnson (JNJ) or ShockWave Medical's (SWAV) Stock?
News of healthcare behemoth Johnson & Johnson (JNJ - Free Report) acquiring medical device company ShockWave Medical (SWAV - Free Report) made headlines this morning. The acquisition is expected to be completed later this year and is valued at $13.1 billion or $335 a share and 3% above ShockWave's current stock price.
ShockWave’s stock is up 2% in Friday’s trading session with Johnson & Johnson shares virtually flat and trading at $152 a share. With that being said, let’s see if it’s a good time to buy stock in either of these healthcare leaders.
Image Source: Zacks Investment Research
Acquisition Overview
As one of the most diversified large-cap pharmaceutical companies, Johnson & Johnson has a pipeline of multi-million-dollar drugs covering a broad range of areas including neuroscience, cardiovascular and metabolism, immunology, oncology, hypertension, and infectious diseases.
Acquiring ShockWave will likely boost Johnson & Johnson’s MedTech segment which includes interventional solutions. To that point, ShockWave develops and commercializes intravascular lithotripsy (IVL) technology and products that are created to change the way calcified cardiovascular disease is treated.
Notably, Johnson & Johnson brought in $93.02 billion in sales in 2023 and has a market cap of $367 billion with ShockWave bringing in $730.23 million in sales last year and having a market cap of $11.8 billion.
Image Source: Zacks Investment Research
Growth & Outlook
This year Johnson & Johnson’s total sales are expected to dip -5% to $88.35 billion. However, fiscal 2025 sales are expected to rebound and rise over 2% to $90.6 billion. More importantly, annual earnings are projected to be up 7% in FY24 and are pegged to rise another 3% in FY25 to $10.97 per share.
Image Source: Zacks Investment Research
Pivoting to ShockWave’s outlook, total sales are forecasted to climb 26% in FY24 to $921.19 million. Plus, FY25 sales are projected to leap another 22% to $1.12 billion. ShockWave’s annual earnings are expected to soar 27% in FY24 to $4.89 per share compared to $3.85 a share last year. Even better, FY25 EPS is projected to jump another 27%.
Image Source: Zacks Investment Research
Bottom Line
ShockWave’s stock currently sports a Zacks Rank #2 (Buy) given its attractive growth trajectory and the implied upside to its acquisition price. As for Johnson & Johnson, its stock lands a Zacks Rank #3 (Hold) as the healthcare giant’s current outlook isn’t overwhelming but acquiring ShockWave could certainly propel its top and bottom lines down the road.