Johnson & Johnson (JNJ) Is Considered a Good Investment by Brokers: Is That True?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Johnson & Johnson (JNJ), and emphasizes the importance of using these recommendations in conjunction with other research tools like the Zacks Rank. Group 1: Brokerage Recommendations for Johnson & Johnson - Johnson & Johnson has an average brokerage recommendation (ABR) of 1.85, indicating a consensus between Strong Buy and Buy based on 26 brokerage firms' recommendations [2] - Out of the 26 recommendations, 14 are classified as Strong Buy and 2 as Buy, accounting for 53.9% and 7.7% of all recommendations respectively [2] Group 2: Limitations of Brokerage Recommendations - Solely relying on brokerage recommendations may not be advisable, as studies indicate they often fail to guide investors effectively towards stocks with high price appreciation potential [5] - Brokerage analysts tend to exhibit a positive bias due to their firms' vested interests, leading to a disproportionate number of favorable ratings compared to negative ones [6][11] Group 3: Zacks Rank as an Alternative - The Zacks Rank is presented as a more reliable indicator of a stock's near-term price performance, based on earnings estimate revisions rather than brokerage recommendations [8][12] - The Zacks Rank is timely and reflects the latest earnings estimates, unlike the ABR, which may not be up-to-date [13] Group 4: Current Earnings Estimates for Johnson & Johnson - The Zacks Consensus Estimate for Johnson & Johnson's earnings for the current year remains unchanged at $10.87, suggesting stable analyst views on the company's earnings prospects [14] - Due to the unchanged consensus estimate and other factors, Johnson & Johnson holds a Zacks Rank of 3 (Hold), indicating a cautious approach despite the Buy-equivalent ABR [15]