JNJ Vaccine Surge Could Be Short-Lived

The equity is sitting below its year-to-date breakeven mark

Digital Content Manager
Sep 23, 2020 at 10:59 AM
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The shares of Johnson & Johnson (NYSE:JNJ) are up 1.2% at $145.95 this morning, after the company kicked off a late-stage, 60,000-person trial of a single-shot COVID-19 vaccine, with results expected either by the end of the year or early 2021. A single-shot vaccine could simplify the distribution of millions of doses, compared to leading rivals that require two doses. 

On the charts, however, the security has struggled to gain long-term momentum. In fact, the shares have traded mostly sideways over the past couple of months, and is now seeing pressure emerging at the 20-day moving average. Year-to-date, JNJ still sits below its breakeven mark.

Analysts were already majorly optimistic towards Johnson & Johnson stock heading into today, leaving the equity ripe for downgrades and/or price-target cuts moving forward. Twelve of the 16 in coverage sporting a "buy" or better rating, and only four carry a tepid "hold." Meanwhile, the 12-month consensus target price of $165.06 is a 13.1% premium to current levels.

That upbeat analyst sentiment is echoed in the options pits, where calls are far more popular. JNJ sports a 50-day call/put volume ratio of 3.65 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which sits in the 90th percentile of its annual range. Should this bullish sentiment begin to unwind, it could send the security lower.

Lastly, Johnson & Johnson stock's Schaeffer's Volatility Index (SVI) of 24% sits in just the 19th percentile of all other annual readings, meaning the equity sports attractively priced premiums at the moment. In other words, this makes now a good time to weigh in on JNJ options. 


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