Source: PaxForex Premium Analytics Portal, Fundamental Insight

As it became known, Johnson & Johnson's COVID-19 vaccine was recently approved for emergency use in the U.S. in late February, which helped the stock move higher.

That news on March 1 retained JNJ in the buy zone. Several days earlier, an advisory committee unanimously approved the vaccine for use. The Food and Drug Administration then formally approved the vaccine. The next day, another advisory panel to the Centers for Disease Control and Prevention approved the vaccine. Deliveries began a day later, March 1.

The Johnson & Johnson vaccine is the only vaccine on the market. Pfizer, in collaboration with partners BioNTech, and Moderna offer the vaccine that requires two doses approved in the U.S. and other countries.

Overall, the Johnson & Johnson vaccine is less effective at only 66%. Pfizer and Moderna vaccines are 95% and 94.1% effective, respectively. But clinical trials show that it blocks 57% of Covid-19 cases based on testing from South Africa. Pfizer and Moderna have only been able to conduct laboratory tests against this mutation.

Should investors consider buying JNJ stock now, before the stock skyrockets?

No doubt, Johnson & Johnson is the most diversified medical company by market capitalization.

Its products include immunology, oncology, and neurology drugs. These three segments accounted for more than three-quarters of J&J's total sales in the fourth quarter. Operationally and on a strict basis, all three divisions grew.

Overall, Johnson & Johnson drug sales improved 16.3% to $12.27 billion. On an operational basis, drug sales were up 14.6%.

The pandemic had a negative impact on sales of medical devices and consumer health products. Sales of consumer health products increased 1.4% to $3.62 billion. But sales of medical devices fell 0.7% to $6.59 billion.

Total revenue rose 8.3% to $22.48 billion. Adjusted earnings fell 1.1% to $1.86 per share. Analysts polled by FactSet forecast adjusted earnings of $2.32 a share on $21.99 billion, up 1% and 6%, respectively.

In 2020, the company posted 0.6 percent growth across all products, about the same as a 1 percent increase in sales the previous year.

In its report for the fourth quarter of 2020, Johnson & Johnson guided sales for the full year 2021 to between $90.5 billion and $91.7 billion. Adjusted earnings are expected to be $9.40-$9.60 per share.

As we noted earlier, Johnson & Johnson recently joined Pfizer and Moderna in licensing the Food and Drug Administration-approved coronavirus vaccine. The company applied to the FDA for emergency approval in February. Later that month, documents were submitted showing that the FDA had decided to approve the vaccine.

On Feb. 26, an advisory committee discussed the pros and cons of the vaccine. In the end, the committee members voted unanimously to approve the vaccine for people 18 years of age and older.

In clinical trials, the J&J vaccine provided 66% overall protection against moderate to severe coronavirus cases. It also prevented 100% of hospitalizations and mortality. The promising coronavirus vaccine is 72% effective in the USA, 66% in Latin America, and 57% in South Africa.

No need to say, South Africa is extremely optimistic about JNJ stock. Only J&J and Novavax have been able to test their vaccines on humans against the dangerous South African virus variant. In comparison, Novavax said its vaccine was 60 percent effective against this mutant virus.

Johnson & Johnson's Covid-19 vaccine is the only vaccine supported by the U.S. government that requires only one shot. It also lacks the same cold transport and storage requirements as Pfizer/BioNTech and Moderna vaccines, which are designed for two shots.

It should be noted that news of the vaccine has had a favorable impact on JNJ stock in the past.

On March 30, Johnson & Johnson stock surged 8% after CEO Alex Gorsky said the pharmaceutical company could get the coronavirus vaccine in the first or second quarter of 2021. Johnson & Johnson plans to have 1 billion doses by the end of 2021.

In mid-February, J&J announced an expanded partnership with the Office of Advanced Biomedical Research and Development to develop Covid-19 drugs.

urning to the technical side, Johnson & Johnson stock has been a buy since noon on March 1. Investors are advised to buy the stock if its price is less than 5% of the buy point. JNJ stock is within the narrow limits of that buying zone. The stock has been slightly below its 50-day moving average but above the 200-day line.

But the company's fundamentals are not strong, as litigation risk continues to complicate J&J's future. And right now, analysts expect earnings and sales to rise by single digits. 

Nevertheless, large companies like Johnson & Johnson can add to profits without massive growth streaks.

Watch for news from Johnson & Johnson regarding its vaccine, which could help JNJ stock rise.

While the price is below 165.00, follow the recommendations below:

• Time frame: D1
• Recommendation: short position
• Entry point: 159.00
• Take Profit 1: 153.00
• Take Profit 2: 149.00

Alternative scenario:

If the level 165.00 is broken-out, follow the recommendations below.

• Time frame: D1
• Recommendation: long position
• Entry point: 165.00
• Take Profit 1: 171.00
• Take Profit 2: 174.00