Investors who have owned stocks in the last year have generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return over the last 12 months is 34.3%. But there is no question some big-name stocks performed better than others along the way.

Johnson & Johnson’s Difficult Road: One company that has been a disappointing investment in the last year has been pharmaceutical giant Johnson & Johnson (NYSE: JNJ).

Johnson & Johnson investors have likely been extremely disappointed with the performance of the stock in the past year given how much attention the company’s COVID-19 vaccine has gotten.

But one of the biggest problems with the vaccine thesis is that it’s unclear how much of a catalyst the vaccine will be for Johnson & Johnson beyond 2021.

Pfizer Inc. (NYSE: PFE) recently submitted data to the FDA for potential authorization of a COVID-19 booster shot, but it’s difficult to predict how many people will be willing to get them on an annual basis.

Beyond the vaccine thesis, Johnson & Johnson’s revenue growth has been below 2% annually since 2017, which isn’t the type of high-flying growth numbers investors have been rewarded in the past 12 months. Even with the company investing $2.3 billion in research and development of new drugs, Johnson & Johnson is still more of a value stock than a growth stock.

In addition, the company is facing a number of costly and potentially damaging legal battles. In 2020 alone, Johnson & Johnson was fined $1,750 million related to cases claiming that talc in its baby powder caused cancer and was ordered to pay another $344 million to customers claiming they were misled about the safety of its pelvic mesh products. Johnson & Johnson is also potentially on the hook for roughly $5 billion in settlements related to its role in the opioid crisis.

At the beginning of 2020, Johnson & Johnson shares were trading at around $146. By the beginning of March, the stock was down to $134.78, after news of the COVID-19 spreading in China prompted concerns about a U.S. pandemic.

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Johnson & Johnson bottomed at $105.63 during the pandemic-driven March sell-off. Fortunately for J&J investors, the dip did not last long.

By late April, Johnson & Johnson shares were back to new all-time highs above $150 on vaccine optimism. However, the stock stalled there while J&J and other competitors raced to win the vaccine testing and approval race.

Johnson & Johnson shares dropped as low as $131.09 in October when the company briefly halted its COVID-19 vaccine trials after test subjects contracted unexplained illnesses. J&J didn’t win the vaccine race, but its vaccine was ultimately granted emergency FDA authorization in late February 2021.

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Johnson & Johnson In 2021, Beyond: The stock hit $171.50 in January in anticipation of the FDA approval. Technical resistance at the $171 level held in January, May and early July before Johnson & Johnson finally broke out to the upside in late July and made it as high as $177.48 in recent days.

Still, J&J investors who bought one year ago and held on have generated a lackluster return on their investment. In fact, $1,000 in Johnson & Johnson stock bought on Aug. 16, 2020, would be worth about $1,220 today, assuming reinvested dividends.

Looking ahead, analysts are expecting modest additional gains for Johnson & Johnson in the next 12 months. The average price target among the 15 analysts covering the stock is $187, suggesting a 5.5% upside from current levels.

Photo: Courtesy Johnson & Johnson

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