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Johnson & Johnson: Moderate Upside Led By Pharmaceutical Division
- New pharmaceutical products driving growth.
- Consumer and MD&D products stable but have weak growth prospects.
- Levered Returns Model shows moderate upside of 9%.
Dividend Aristocrats In Focus Part 52 Of 54: Johnson & Johnson
- Johnson & Johnson has increased EPS for 30 consecutive years and dividends per share for 52 consecutive years.
- Johnson & Johnson's stock is less volatile than most utilities.
- The company is extremely well-diversified and has 4 separate competitive advantages.
Johnson & Johnson: Does The Dividend Blue Chip Remain Attractive?
- Based on my free cash flow forecasts, JNJ can comfortably sustain a 6% annual dividend growth in the next few years.
- A 2-stage dividend discount model suggests that the stock is now fairly valued at $109.
- As there is insufficient upside potential and dividend yield is at 5-year low, a hold rating is warranted.
- Share prices generally fall on the day the shares go ex dividend.
- Share prices are mostly higher at the dividend pay date than at the ex dividend date.
- For DRIP shareholders, shares are generally purchased by the company on market at the dividend pay date, for assigning to shareholders in lieu of paying the cash dividend.
- Could these on market purchases be inflating share prices on the dividend pay date to the detriment of DRIP investors?
- Modeling of the alternatives, using Johnson & Johnson for the ten years 2003 to 2014 as an example, provides a fair guide to the answer.
Long-Term Dividend Investors Should Use Historic Yield To Find Hidden Value
- After identifying a great company, take a look at historic yield.
- Use the 10 year average to enhance total return and dividends.
- This method can be a quick way of determining when pricing is in your favor on dividend growth investments.
Update: FDA Clears Johnson & Johnson's Insulin Pump, An Artificial Pancreas Quickened
- Animas, a Johnson & Johnson unit, has won FDA approval for its Animas Vibe insulin pump.
- In my original article, I said that Johnson & Johnson's artificial pancreas may be launched much earlier than expected.
- The FDA clearance of the Animas Vibe insulin pump affirms my view.
How Much Do Fair-Value Estimates Help The Retail Investor?
- Fair-value estimates for Johnson & Johnson lead to a range of numbers that seems too wide to form a helpful basis for planning trades.
- If we use market-price patterns, focus on their most frequently traded value (the mode), along with their pattern of concentration around that mode, during the period of observation.
- I find that at least 85% of JNJ trading prices during a given month tend to lie within two mean deviations from the mode.
- This information can be helpful in forecasting the "high probability price zone" for JNJ in the month ahead.
- JNJ is suitable for the Enterprising Investor following the ModernGraham approach.
- According to the ModernGraham valuation model, the company is overvalued at the present time.
- The market is implying 6.87% earnings growth over the next 7-10 years, which is well above the company's actual growth in recent years.
- J&J sports a healthy yield of 2.6% and payout ratio of only 45%.
- J&J has paid and raised a dividend for over 51 years.
- J&J is a member of the Dividend Aristocrats, which can be counted on for yearly dividend increases.
Johnson & Johnson Vs. BP: Ignore Dividend Growth Rate At Your Own Peril
- This article gives you a hypothetical option to choose between JNJ and BP for a dividend reinvestment strategy for growing an income stream dating back to 2003.
- Comparing raw data sets, either actual historical or projected, between two alternatives in order to select the preferred option requires more than intuition -- it requires modeling.
- A higher dividend growth rate is a powerful antidote to a lower initial dividend yield.
Johnson & Johnson Takes Care Of Both Consumers And Stockholders
- Johnson & Johnson is a well-established company founded in the 19th century and is one of the largest companies in the U.S.
- Multiple divisions of the company focus efforts across a wide range of personal care, drugs and medical equipment products.
- Johnson & Johnson is part of an elite group whose stocks have risen steadily for decades.
- Competition is increasing in drug markets as the company seeks to maintain its leadership across a wide variety of fields.
- The company has proven to be a stable and safe bet for investors with a long history of increasing profits and dividends.
- This article gives you a hypothetical option to choose between BP and JNJ for dividend income dating back to 2003.
- The results may surprise you, given the bullet points you might know about each company.
- In the end, a higher yield can make up for many income blunders.
Johnson & Johnson DGI Trumps Pure Income Vanguard Wellington Part II
- Johnson & Johnson’s strong performance over the last 20 years, together with the power of dividend reinvestment, enabled it to massively outperform pure income investment Vanguard Wellington Income Fund.
- But Johnson & Johnson’s current earnings and dividend growth rates are far below the averages for its earnings and dividend growth over the past 20 years.
- How might total returns from a Pure Income investment in Vanguard Wellington (VWELX), compare to an investment in Johnson & Johnson (JNJ) over the next 32 years?
- Would it be viable in the future to sell JNJ shares, to match income withdrawals from a pure income investment in VWELX, and still grow the JNJ investment?
Johnson & Johnson Part VII: 'Magic Pants' And 'Doubling Pennies' Continued
- Gain an understanding how total yearly dividend growth from an investment in Johnson & Johnson stock would be impacted by lower earnings and dividend growth rates.
- Learn how total yearly dividend growth from an investment in Johnson & Johnson stock would be impacted by a lower earnings growth rate but with dividend growth maintained.
- See how changes in earnings and dividend growth rates do not necessarily have similar favorable or unfavorable effects on ending investment values and yearly dividend amounts.
Johnson & Johnson Part VI: 'Magic Pants' And 'Doubling Pennies'
- Gain an understanding how return on investment in Johnson & Johnson would be impacted by lower earnings and dividend growth rates.
- See how return on investment in Johnson & Johnson would be impacted by lower earnings growth rates but with rate of dividend growth maintained.
- I give my take on the “Magic Pants” analogy, explaining how an investment at a yield of less than 3%, can result in rates of return of 10% and above.
Is Johnson & Johnson A Stock Worth Having In The Portfolio Right Now?
- This is no doubt a stalwart of a company, but the earnings growth expectations are pretty small.
- The dividend a solid 2.5% yield, but with no earnings growth expectations I'd like to see a higher yielding dividend in the name.
- I'm going to take a pass on the name for now and keep searching, but if it drops in price I'll definitely be looking at it again.
Johnson & Johnson Seeks Further Expansion, As China Opens Its Doors To Foreign Investment
- JNJ recently announced its intention to expand its business in China.
- This is well-timed, given China’s opening to greater foreign investment, and increasing demand for healthcare.
- JNJ’s consistent, strong results have allowed the company freedom to explore this expansion.
- We continue to be very optimistic on JNJ, moving forward into 2015.
Johnson & Johnson's Ebola Vaccine Will Lift International Sales For The Company
- Johnson & Johnson has committed to spending nearly $200 million on the development of a cure for the Ebola virus, that has claimed the lives of over 4000 people.
- The company is known to have received direct funding from the NIAID. It will also be using technology from Bavarian Nordic in a $187 million deal.
- The third quarter results noted increases in sales. International sales declined marginally during the quarter. Net income and earnings increased rapidly.
- Johnson & Johnson could face stiff competition from GlaxoSmithKline, which is already conducting clinical trials. But the development of the vaccine could lift international sales for the company.
- Investment in Johnson & Johnson is a fairly stable investment that is likely to show growth in the future periods. It offers a reasonable dividend yield of 2.60%.
Johnson & Johnson DGI Trumps Pure Income Vanguard Wellington
- Can Dividend Growth Investing be Total Return Investing and vice versa? Yes.
- Can Dividend Growth Investing be Pure Income Investing and vice versa? Yes.
- How might a Pure Income investment initiated in 1994 compare to an investment in JNJ for a similar period, if JNJ shares were necessarily sold to meet similar income requirements?
- The emotion can be taken out of the argument, with comparative actual data, and simple spreadsheet calculations providing a logical conclusion.
Don't Dump Your Johnson & Johnson Shares For VHT Just Quite Yet
- A recent article recommended selling Johnson & Johnson stock in favor of Vanguard Health Care ETF, based largely on valuation and diversification.
- Does the VHT ETF truly offer investors more than JNJ? Or can JNJ serve a different purpose in investors' portfolios?
- How does the valuation method described by the author - fair P/E equals dividend yield plus expected earnings growth - compare to Street estimates for certain healthcare stocks?
Thu, Dec. 18, 10:34 AM
- Antitrust regulators in France have fined 11 companies a combined $1.17B on price-rigging charges.
- Companies hit by the action include L'Oreal (OTCPK:LRLCF), Unilever (NYSE:UL), Colgate-Palmolive (NYSE:CL), Hillshire Brands (NYSE:HSH), Johnson & Johnson's (NYSE:JNJ) French business, and Reckitt Benckiser Group (OTCPK:RBGLY).
- Statements from the consumer products sellers expressed some outrage over the sanctions due to the limited impact on consumers.
Wed, Dec. 17, 11:30 AM
Wed, Dec. 17, 9:30 AM
- Halozyme Therapeutics (NASDAQ:HALO) and Janssen Biotech (NYSE:JNJ) enter into a worldwide Collaboration and License Agreement to develop and commercialize products based on Halozyme's Enhanze technology, which is based on HALO's proprietary recombinant human hyaluronidase enzyme (rHuPH20) that temporarily modifies hyaluronan, a component of the extracellular matrix, to aid in the dispersion and absorption of injected therapeutic drugs.
- Under the terms of the contract, Halozyme grants Janssen a global license to develop and commercialize products for up to five targets combining rHuPH20 with Janssen's proprietary compounds. Halozyme will receive an upfront payment of $15M and up to $566M in development, regulatory and sales milestones plus royalties on commercial sales.
Tue, Dec. 16, 7:48 AM
- Belgian biotech Galapagos NV (OTCPK:GLPYY) and Janssen Pharmaceutica NV (NYSE:JNJ) terminate their collaboration to develop the GPR84 inhibitor GLPG1205 for inflammatory bowel diseases. Full and unencumbered rights to the GPR84 program have now been transferred back to Galapagos. It plans to initiate a Phase 2 trial before the end of December.
- The reasons for the move are not disclosed.
Fri, Dec. 12, 8:14 AM
- U.S. District Court Joseph Goodwin took the unusual step of advising C.R. Bard (NYSE:BCR) to settle more than 12,000 vaginal mesh lawsuits it faces in light of the large verdicts to date. "I can't imagine a corporation facing potentially billions of dollars in verdicts wouldn't find it advisable to try to achieve a settlement for a much lesser sum," he says. "I base that billions of dollars business on some of the rather large verdicts that we've had." The judge is overseeing all federal court litigation involving the products. More than 30,000 cases have been consolidated before him.
- Women who have had the products implanted for the treatment of incontinence or to support internal organs claim that the devices erode over time causing organ damage and pain. Jury decisions so far have found the devices defectively designed or the manufacturers failed to adequately warn physicians and patients of the risks.
- In October, Bard agreed to settle 500 suits for $21M. In August, the company lost a case in West Virginia and was ordered to pay a woman $2M in damages.
- Bard is not the only company mired in litigation. Johnson & Johnson (NYSE:JNJ) and Boston Scientific (NYSE:BSX) have recently lost jury verdicts. In September, a jury in West Virginia ordered JNJ to pay $3.27M to a woman who received the implant. Juries in Texas and Florida ordered BSX to pay $45.2M to eight women and $73M to one woman, respectively.
- The FDA ordered the three manufacturers to study the rates of organ damage and complications linked to the devices.
- Previously: Boston Sci loses first federal case over vaginal mesh product (Nov. 14, 2014)
Fri, Dec. 12, 7:34 AM
- In a Phase 3b study, Novartis' (NYSE:NVS) IL-17A inhibitor Cosentyx (secukinumab) demonstrated superiority to Janssen's (NYSE:JNJ) Stelara (ustekinumab) in psoriasis patients. The study met its primary endpoint of PASI 90 at week 16 as well as its secondary endpoint of PASI 75 at week 4. The results from the 679-patient study will be presented at a medical conference next year.
- In an earlier trial, Cosentyx demonstrated superiority to Amgen's Enbrel (etanercept).
- Regulatory approvals of secukinumab for the treatment of moderate-to-severe plaque psoriasis are pending.
- Previously: Ad Comm backs approval of secukinumab (Oct. 21, 2014)
- Previously: Europe Ad Comm gives thumbs up to Novartis psoriasis drug (Nov. 21, 2014)
Thu, Dec. 11, 11:58 AM
- The Global Alliance for Vaccines and Immunisation, Gavi, plans to spend as much as $300M for up to 12 million doses of an Ebola vaccine as soon as the World Health Organization (WHO) recommends one for use. An additional $90M could be used to support countries that introduce the vaccine and to rebuild devastated health systems and restore immunisation services in Ebola-stricken countries.
- Gavi is funded by governments and the Bill & Melinda Gates Foundation.
- Two vaccine candidates are currently being tested in humans in Phase 1 trials. The first trial, assessing Merck (MRK +0.8%) and NewLink Genetics' (NLNK -0.8%) candidate, experienced a hiccup recently when four volunteers complained of joint pain in their hands and feet. The trial is on hold as a precaution, but will restart on January 15 contingent on no further adverse events. The second trial, assessing the combination of GlaxoSmithKline's (GSK +0.4%) monovalent cAd3-EBO Z Ebola vaccine candidate with Bavarian Nordic's MVA-BN Filo booster vaccine, has experienced no adverse events to date.
- Johnson & Johnson (JNJ +0.8%) will begin testing its Ebola vaccine candidate in January and says it will have 250K doses for clinical study by May.
- Previously: Merck-NewLink Ebola vaccine trial interrupted (Dec. 11, 2014)
- Previously: Phase 1 underway for Ebola booster vaccine regimen (Dec. 4, 2014)
- Previously: J&J to begin testing Ebola vaccine in January; expects 250K doses ready by May (Oct. 22, 2014)
Fri, Dec. 5, 1:57 PM
- As expected, the Biotechnology Industry Organization (BIO) gives a resounding thumbs up in support of adding Ebola to the FDA Priority Review Voucher Program Act. Under the act, developers of a vaccine or treatment for a qualified tropical disease receive a voucher for FDA priority review for another product of its choice.
- Late Wednesday, the U.S. House of Representatives voted unanimously to add Ebola to the Act. Additional refinements to the legislation include making it easier for the Secretary of Health and Human Services to add to the list of qualified diseases, allowing the vouchers to be sold and transferred multiple times and shortening the timeline for notifying the FDA of the intention to use a priority review voucher.
- The changes bring the tropical diseases priority review voucher program more in line with the rare pediatric disease priority review voucher program.
- Ebola-related tickers: (GSK +0.2%)(JNJ +0.5%)(MRK +1%)(NLNK +2.2%)(TKMR -1.4%)(HEB +0.6%)(SRPT -0.8%)(BCRX +0.8%)(CMRX +3.2%)
Fri, Dec. 5, 7:19 AM
- Doctors say that simple intravenous fluid drips could save the lives of many Ebola patients, but they are not being deployed due to a perception that no treatment will work. Many patients are succumbing to extreme dehydration and electrolyte depletion caused by vomiting and diarrhea, according to Ian Roberts of the London School of Hygiene and Tropical Medicine and Anders Perner of Copenhagen University. "Ebola treatment must be more that just a setting for quarantine. Patients will be reluctant to attend treatment centers unless the care they receive...is superior to the care provided by family members."
- The epidemic in West Africa has claimed more than 6,000 lives out of ~17,000 that have been infected. All but 15 of the deaths have occurred in Sierra Leone, Guinea and Liberia.
- ETFs: IRY, IXJ
- Ebola-related tickers: (NYSE:GSK) (NYSE:JNJ) (NYSE:MRK) (NASDAQ:NLNK) (OTCQB:AEMD) (NASDAQ:TKMR) (NYSEMKT:HEB) (NASDAQ:SRPT) (NASDAQ:BCRX)
Thu, Dec. 4, 8:23 AM
- In a Phase 1 trial sponsored by the University of Oxford, 30 healthy volunteers will receive Bavarian Nordic's MVA-BN Filo booster vaccine in combination with the monovalent cAd3-EBO Z Ebola vaccine co-developed by GlaxoSmithKline (NYSE:GSK) and the U.S. National Institutes of Health's National Institute of Allergy and Infectious Diseases (NIAID). Recent preclinical research suggests that employing an MVA-based booster dose may deliver a more robust and durable immune response to the primary vaccine.
- The study involves 60 healthy adults divided into three cohorts each receiving different doses of the cAd3-EBO Z vaccine. Half of each cohort will also receive the booster dose of MVA-BN Filo.
- The primary endpoint is safety and tolerability. The secondary endpoint is the cellular and humoral immune response. Preliminary results should be available in 1H 2015.
- Both cAd3-EBO Z and MVA-BN Filo have been developed in collaboration with NIAID, which also investigated the prime boost regimen of MVA-BN Filo and Crucell Holland B.V.'s AdVac technology. Crucell is part of J & J (NYSE:JNJ) unit Janssen Pharmaceuticals. Bavarian Nordic and Janssen are collaborating on the development and manufacture of large quantities of their vaccine regimen and intend to start clinical trials shortly.
- Related tickers: (NYSE:MRK) (NASDAQ:NLNK)
Wed, Dec. 3, 10:01 AM
Tue, Dec. 2, 8:30 AM
- The European Medicines Agency accepts for review a Type II variation application for Imbruvica (ibrutinib) filed by Pharmacyclics (NASDAQ:PCYC) strategic partner Janssen-Cilag International NV (NYSE:JNJ) for a potential label expansion covering the treatment of adult patients with Waldenstrom's macroglobulinemia (WM), a rare type of B-cell lymphoma.
- The acceptance of the filing triggers a $20M milestone payment to Pharmacyclics from collaboration partner Janssen Biotech.
- A supplemental NDA was filed with the FDA for WM in October.
- Imbruvica is currently approved for the treatment of chronic lymphocytic leukemia and mantle cell lymphoma.
Tue, Nov. 25, 4:47 PM
- Amgen (AMGN -1.2%) and development partner AstraZeneca (AZN -0.6%) announce that the Amagine-2 Phase 3 trial evaluating two doses (210 mg and 140 mg every two weeks) of brodalumab in patients with moderate-to-severe plaque psoriasis met its primary endpoints compared to J&J's (JNJ -0.1%) Stelara (ustekinumab) and placebo at week 12. The 210 mg arm and the weight-based analysis group both demonstrated superiority to Stelara on achieving total skin clearance as measured by the Psoriasis Area Severity Index (PASI 100 or 100% reduction in score).
- 44.4% of patients in the brodalumab 210 mg group, 33.6% in the brodalumab weight-based group, 25.7% of patients in the brodalumab 140 mg group, 21.7% of patients in the Stelara group and 0.6% of patients in the placebo group achieved PASI 100. PASI 75 (75% reduction in score) scores for the same groups were: 86.3%, 77.0%, 66.6%, 70.0% and 8.1%, respectively.
- All secondary endpoints comparing brodalumab to placebo were also met. The first major secondary endpoint comparing PASI 100 for brodalumab 140 mg against Stelara at week 12 was numerically greater but not statistically significant (p=0.078). The remaining secondary endpoints for the 140 mg group versus Stelara were also numerically greater (all p values<0.05) but could not be considered statistically significant due to the sequential testing method.
- Previously: Positive Phase 3 results for brodalumab
- Previously: Amgen's brodalumab beats Stelara in Phase 3 trial
Tue, Nov. 25, 11:10 AM
- Johnson & Johnson's (JNJ +0.1%) Janssen Research & Development, LLC submits a New Drug Application (NDA) with the FDA for Yondelis (trabectedin) for the treatment of patients with advanced soft tissue sarcoma, including liposarcoma and leiomyosarcoma subtypes, who have received prior chemotherapy including an anthracycline.
- Soft tissue sarcomas are cancers of the soft tissues that connect, support and surround other body structures such as muscle, fat, blood vessels and nerves.
Tue, Nov. 25, 8:18 AM
- Pharmacy benefits manager Express Scripts (NASDAQ:ESRX) is at the forefront of an increasing wave of resistance to the high prices of new drugs from pharma and biotech firms, some which cost as much as $50K per month. Pharmaceutical spending in the U.S. is $270B and may breach $500B in five years. ESRX's method of controlling costs is to refuse to pay for them. For 2015, for example, it is excluding 66 branded drugs from its main formulary, an increase of 18 from 2014's 48. On the list is Johnson & Johnson's (NYSE:JNJ) rheumatoid arthritis drug Simponi (golimumab) which costs $3K per month.
- Other prescription benefits managers are employing similar tactics. CVS Health (NYSE:CVS) will exclude 95 drugs from its 2015 formulary including Pfizer's (NYSE:PFE) multiple sclerosis med Rebif (interferon beta-1a) which costs $5K for a four-week supply.
- Governments are pushing back as well. Among 42 state Medicaid programs, 27 pay for Gilead Sciences' HCV med Sovaldi (sofosbuvir) only for patients with severe liver damage while others impose coverage limitations for patients with recent substance-abuse problems. In the U.S., the full regimen cost is $84K. Recently, Britain's National Institute for Health and Care Excellence (NICE) balked at recommending reimbursement for Roche's (OTCQX:RHHBY) blood cancer drug Gazyvaro (obinutuzumab).
- Ninety percent of commercial health plans require pre-approval of specialty drugs, up from 82% in 2011.
- Previously: Roche's Gazyvaro not NICE in the UK
- Previously: Global drug tab will breach trillion dollar mark this year
- ETFs: IBB, BIB, IRY, BIS, IXJ, DRGS
- Related tickers: (NYSE:NVS) (NYSE:AZN) (NASDAQ:AMGN) (NASDAQ:BIIB) (NASDAQ:CELG) (NYSE:LLY) (NYSE:SNY) (NYSE:ABT) (NYSE:ABBV) (NYSE:BMY) (NYSE:MRK) (NYSE:GSK)
Mon, Nov. 24, 3:43 PM
- Twenty-two spinoffs have been completed in 2014, the most in a decade, and another 28 have been announced. Among the catalysts are activist investors, so Credit Suisse screened for companies with multiple business segments, slow growth, and stocks trading for lower multiples than peers, in other words, "good, quality companies that are struggling to grow."
- The list is heavy on big media names like Time Warner (NYSE:TWX) and Twenty-First Century Fox (NASDAQ:FOXA), big tech like Oracle (NYSE:ORCL), Symantec (NASDAQ:SYMC), and IBM, and big industry like Lockheed Martin (NYSE:LMT), Ingersoll-Rand (NYSE:IR), and Raytheon (NYSE:RTN), but just two financial names - Travelers (NYSE:TRV) and Torchmark (NYSE:TMK).
- The rest: MO, CA, WU, DPS, PBI, SJM, HRS, SWK, EMR, WLP, MAT, GE, SNA, LLL, ITW, STJ, PDCO, HPQ, DLPH, HAS, NAVI, GME, CBS, JNJ, SLB.
JNJ vs. ETF Alternatives
Johnson & Johnson is a holding company, which is engaged in the research and development, manufacture and sale of a range of products in the health care field within its Consumer, Pharmaceutical and Medical Devices, and Diagnostics business segments.
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