Goldman Sachs names Johnson & Johnson to its high-conviction list
- Goldman Sachs updated its conviction list for May, adding Johnson & Johnson and removing Meritage Homes.
- The bank forecasts a 10% upside for Johnson & Johnson, citing its defensive growth and strong balance sheet.
- These updates reflect broader economic concerns of lower growth and higher inflation impacting the stock market.
On May 1, 2025, Goldman Sachs published an update to its conviction list, which now includes 22 selected stocks across various sectors including consumer, financial, and telecommunications. The bank added Johnson & Johnson, a leader in the pharmaceutical industry, citing its strong financial position and potential for revenue growth driven by innovative medicine investments. At the same time, Goldman removed Meritage Homes from the list, although it still maintains a buy rating for that stock. Analyst Steven Kron expressed concerns about the economic outlook, predicting challenges for the stock market due to a combination of lower growth and higher inflation influenced by political policies. Goldman Sachs highlighted Johnson & Johnson's expected 10% share price increase and pointed out its stability as a defensive grower within the industry. The investment bank noted the company's robust balance sheet and a promising pipeline of drugs currently in trials, including treatments for conditions such as Crohn's disease. These factors are anticipated to help mitigate risks associated with the expiration of patents on existing drugs, like Stelera. In addition to Johnson & Johnson, Goldman also added Houlihan Lokey, an investment bank that specializes in restructuring services. This addition was based on its resilience in economic downturns, showcasing solid margins and potential for growth in the mid-cap and sponsor M&A sectors. The lead analyst for Houlihan Lokey, James Yaro, emphasized its strong positioning despite market volatility. The changes to the conviction list come at a time when market sentiment is bearish, with recurring themes of economic unpredictability. These updates from Goldman Sachs highlight not only individual company strengths but also reflect broader market concerns. The firm's predictions signal a time of cautious investment strategy, as external factors continue to impose challenges on stock market performance. Investors may view these selections as a mixture of resilience and opportunity in uncertain conditions, reinforcing the significance of a well-structured portfolio in navigating periods of turbulence.