On Wednesday, Johnson & Johnson (JNJ.US) reached a market capitalization of $500 billion, driven by investor confidence in the company's strategy to offset declining sales of its key psoriasis treatment, Stelara. Shares of the pharmaceutical and medical device giant rose 0.4% to $207.56, closing above the $500 billion threshold for the first time.

The stock has now climbed for 13 consecutive trading days—its longest winning streak on record—and has gained 9.9% in November alone, marking its best monthly performance since April 2020. Wall Street is increasingly optimistic about Johnson & Johnson's plans to fill the revenue gap once Stelara loses patent protection. The company is banking on new drugs and acquisitions to bolster its pipeline and mitigate the impact of Stelara's sales decline.

Analysts highlight Johnson & Johnson's stability, noting its conservative strategy and consistent ability to exceed expectations, making it a lower-risk investment compared to many peers. Earlier this year, the company acquired neuroscience drug developer Intra-Cellular Therapies Inc. for approximately $14.6 billion, gaining access to a promising treatment for major depressive disorder. Last week, it agreed to buy cancer-focused biotech Halda Therapeutics for over $3 billion.

Johnson & Johnson recently raised its full-year sales forecast and announced plans to spin off its slower-growing orthopedics business within 18 to 24 months. The stock has surged 44% this year, on track for its best annual performance since 1995, following consecutive declines in 2023 and 2024.

However, Wall Street expects limited upside from current levels. The consensus 12-month price target stands at around $205, slightly below Wednesday's closing price. Still, more than half of the 30 analysts tracked by institutions maintain a "buy" rating.

On November 12, Scotiabank analyst Louise Chen wrote in a client note, "Strong execution is making the company's underlying growth increasingly visible," naming Johnson & Johnson a "top pick" with the highest price target.

The stock's strength also reflects a broader shift in investor sentiment, with funds moving from high-risk sectors of the U.S. market—including expensive AI stocks—to more defensive plays like healthcare. The S&P 500 healthcare sector has rallied 9.7% this month, its biggest monthly gain since April 2020, while the pharmaceuticals sub-index is up roughly 17% in November, poised for a record monthly performance.

Bob Lang, Chief Options Analyst at Explosive Options, noted, "Over the past three and a half weeks, we've seen a rotation from high-risk bets to tech, and then from tech to healthcare. This reflects investors seeking safety in certain healthcare stocks."

The healthcare rally has been led by Eli Lilly (LLY.US), whose shares have jumped 43% this year, making it the first pharmaceutical company to reach a $1 trillion market cap last week. Merck (MRK.US) also hit an all-time high as investors cheered recent acquisitions and successful clinical trials.