JNJ, WMT, or AMZN: Which Mega-Cap Stock Is the Best Pick?
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Johnson & Johnson (NYSE:JNJ)
Healthcare giant Johnson & Johnson operates through its Innovative Medicine and MedTech units. The company has a solid portfolio of drugs across various therapeutic areas like oncology, immunology, and neuroscience.
JNJ is boosting its portfolio through organic growth and strategic acquisitions in an attempt to mitigate the impact of the loss of exclusivity of key drugs and competition from biosimilars for blockbuster drugs like Stelara. Most recently, JNJ acquired Inter-Cellular Therapies for $14.6 billion to boost its presence in the neurological disorder treatments market.
JNJ stock has risen about 6% so far this year, with the company delivering upbeat Q4 2024 results due to robust sales of its cancer treatments. However, lawsuits related to the company's talcum powder continue to be a matter of concern.
Is JNJ Stock a Buy or Sell?
Recently, UBS analyst Danielle Antalffy reiterated a Buy rating on Johnson & Johnson stock with a price target of $180. The analyst noted that a federal judge rejected JNJ's third attempt to use the bankruptcy route to resolve all existing and future talc-related lawsuits. Antalffy said that while this does pose a setback in reaching an ultimate resolution, management highlighted recently that if bankruptcy is denied, the company would 'look at other options, but could go back into the Tort system and fight through there.'
The analyst added that while he expects more details to come from the company, the lack of clarity on the timing of a final resolution remains an overhang on JNJ stock.
Currently, Wall Street has a Moderate Buy consensus rating on Johnson & Johnson stock based on six Buys and eight Holds. The average JNJ stock price target of $168.23 implies about 10% upside potential from current levels. JNJ offers a dividend yield of 3.2%.
Walmart (NYSE:WMT)
Walmart stock is down about 8% so far this year due to concerns about the impact of tariffs. China, which is subject to 54% tariffs, is a key source for Walmart's discretionary merchandise, such as clothing, electronics, and toys. There have been reports about the big-box retailer holding discussions with its suppliers to offer discounts to mitigate the impact of tariffs.
Despite the concerns over margins due to tariff headwinds, several analysts remain bullish on Walmart due to its solid fundamentals, extensive scale, and significant exposure to groceries, which makes it resilient during challenging economic conditions. Moreover, Walmart is now trading at a 21% discount to its 52-week high.
Is Walmart Stock a Buy or Hold?
Last week, Barclays analyst Seth Sigman reiterated a Buy rating on Walmart stock with a price target of $108. The analyst expects the retail giant's bi-annual investment community meeting on April 9 to 'be a victory lap of sorts,' as share gains and flow-through have been better than the expectations set two years ago. Specifically, Sigman expects the event to highlight Walmart's ability to navigate challenges better than most of its peers.
Sigman added that, excluding tariffs, he does not expect a change in WMT's annual growth algorithm, which has moved positively in the last two years. Considering tariffs, the analyst admits that while there is still a lot of uncertainty, his base case is that Walmart will be able to manage better than others by mitigating costs overseas and leveraging high-growth/high-margin revenue streams to maintain its unique pricing advantage and drive market share gain.
Wall Street has a Strong Buy consensus rating on Walmart stock based on 28 Buys versus two Hold recommendations. The average WMT stock price target of $111.60 implies 34.2% upside potential. Walmart is a dividend king but offers a modest yield of over 1%.
See more WMT analyst ratings
Amazon (NASDAQ:AMZN)
Amazon stock has retreated more than 20% year to date amid concerns about the huge impact of tariffs on the e-commerce giant, given that the company sources merchandise from many countries on which U.S. President Donald Trump imposed reciprocal tariffs.
While several analysts acknowledge that tariffs could significantly hurt Amazon's margins, they believe that the company is well-positioned to navigate a challenging backdrop, thanks to its strong customer base, extensive scale, and operational efficiencies.
Moreover, Amazon bulls are confident about the growth potential of the company's AWS (Amazon Web Services) cloud business, driven by a continued shift to the cloud and robust AI (artificial intelligence) tailwinds.
Is Amazon Stock a Buy, Sell, or Hold?
On Monday, Wedbush analyst Scott Devitt reiterated a Buy rating on Amazon stock with a price target of $280. The 5-star analyst noted that the company continues to gain traction with advertisers, thanks to its massive merchandising capabilities and customer data. He added that Amazon's DSP (demand-side platform) has introduced many improvements, resulting in a more competitive offering compared to The Trade Desk (TTD).
Further, Devitt noted that Amazon Prime Video's transition to an ad-based free tier has been largely successful over the last year, bringing in more ad dollars.
Overall, Amazon stock earns a Strong Buy consensus rating based on 45 Buys versus just one Hold recommendation. The average AMZN stock price target of $268.05 implies about 57% upside potential from current levels.
See more AMZN analyst ratings
Conclusion
Wall Street is highly bullish on Walmart and Amazon stocks and cautiously optimistic on Johnson & Johnson stock. Analysts see higher upside potential in AMZN stock than in the other mega-cap stocks. Wall Street views the current pullback in AMZN stock as a good buying opportunity, given the company's dominance in the e-commerce market, the growth potential of the AWS business amid the AI wave, and the solid prospects of the company's ad business.
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