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Johnson & Johnson: Still A Great Income Stock, If A Bit Expensive
- JNJ's valuation has become a bit stretched.
- The stock's record of income is still one of the best out there.
- I like JNJ at $100 or less for its steady dividend raises and earnings visibility.
Johnson & Johnson's Immunology Pipeline Is Golden
- Stelara, already a blockbuster, is in three Phase 3 studies, with two completed, in Crohn's disease, a $4-5 billion market with few options for patients.
- Sirukumab is in the same class as blockbuster Actemra, and could bite into the $14 billion rheumatoid arthritis (RA) market by beating Humira in a head-to-head Phase 3 trial.
- CNTO 6785 is the x-factor with two Phase 2 trials (in RA and COPD) completing next year.
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%.
Tue, Jan. 7, 9:39 AM
- Pharmacyclics (PCYC) stops RESONATE (that's Phase 3 ibrutinib versus ofatumumab in relapsed or refractory CLL or SLL) early on the IDMC's recommendation, as Imbruvica hits its primary and key secondary endpoints.
- Imbruvica shows statistically significant PFS and OS superiority.
- Safety profile is "acceptable and consistent with prior clinical experience."
- FDA and EMA have been notified (EMA by Janssen, JNJ). (PR)
Thu, Jan. 2, 10:04 AM
Dec. 23, 2013, 6:05 PM
- Carlyle Group (CG) appears to be the leader to acquire Johnson & Johnson's (JNJ) clinical diagnostics unit, beating out P-E peer Blackstone (BX) and its partner Danaher (DHR), Reuters reports.
- The exact price of CG's offer is not known, but a deal likely would fetch ~$4B and could be completed within the next two weeks.
- JNJ's ortho clinical diagnostics unit makes blood-screening equipment and laboratory blood tests; it's a small player in a market led by Roche (RHHBY, RHHBF), Siemens (SI), Abbott Labs (ABT) and DHR.
Dec. 20, 2013, 2:58 PM
- Janssen Pharmaceuticals (JNJ +0.6%) inks a new development and commercialization deal with Finland's Orion Corp. for the latter's alpha-2c adrenoceptor antagonists including ORM-12741.
- Orion gets a $31M upfront payment and is eligible for milestone payments and royalties — the company will use the upfront cash to help fund the Phase 2a study of ORM-12741.
- ORM-12741 (which Janssen will have the right to commercialize outside of Europe) is being tested as a possible treatment for "the cognitive and behavioral symptoms related to Alzheimer's." (PR)
Dec. 19, 2013, 3:03 PM
- Janssen Pharmaceuticals (JNJ -0.7%) says it has "reached an initial agreement to lease some parts" of a Bedford, Ohio Ben Venue plant, a move which shows "steps are being taken to transition manufacturing" of Doxil, the popular cancer drug that has been in short supply since 2011 when Ben Venue halted production amid manufacturing problems.
- Previously, the plan was to close the plant by the end of the year.
- "There are multiple steps required to transition manufacturing and any plans are subject to health authority approvals," a JNJ spokesperson remarked.
- For more, see: Doxil may remain scarce amid JNJ, Boehringer dispute
Dec. 17, 2013, 8:12 AM
- Leerink is out with some commentary on the MedTech space.
- Investors should "focus on companies with growth acceleration and/or upside surprise potential independent of (or at least less dependent on) a macroeconomic recovery [or, alternatively,] a higher and increasing percentage of sales derived from end-markets exhibiting above-average growth," Leerink says.
- Not surprisingly, the LVAD device market gets a mention, with Heartware (HTWR) recommended by name (remember, they just snapped up CircuLite which some think can compete with SSH's C-Pulse).
- Other names mentioned by Leerink: Covidien (COV) for neurovascular and energy devices; Stryker (SYK) for neurovascular and robotics; St. Jude's Medical (STJ) and JNJ for atrial fibrillation; Intuitive Surgical (ISRG).
- Thoratec (THOR) gets an LVAD mention as well, which is interesting considering Leerink's recent commentary on the NEJM manuscript which discussed possible thrombus formation with the HeartMate II.
Dec. 15, 2013, 5:13 PM
- A NY Times feature looks at drug companies' wildly successful and wildly aggressive marketing campaign for A.D.H.D. treatments like Adderall (made by Shire (SHPG)) and Ritalin (made by Novartis (NVS)). Recently, companies have begun targeting adults.
- Recent data show that 15% of high school-age children are now diagnosed with A.D.H.D., and that the number of children taking medication has soared to 3.5M from 600K in 1990. One doctor calls the rising rates of diagnosis "a national disaster of dangerous proportions."
- The FDA has cited every major A.D.H.D. drug - including Adderall, Concerta (JNJ), Focalin (NVS, CELG) and Vyvanse (SHPG) - for false and misleading advertising since 2000, some multiple times.
Dec. 13, 2013, 4:27 PM| 3 Comments
Dec. 9, 2013, 7:01 AM
- Johnson & Johnson's (JNJ) Siltuximab drug reduced tumors in a Phase II trial of 79 patients with Castleman disease, a very rare condition that is characterized by enlarged lymph nodes and for which there are no approved therapies.
- A third of the subjects who received siltuximab responded vs none who were given a placebo. A quarter had all symptoms of the disease completely resolved for a median period of 1.3 years.
Dec. 2, 2013, 8:38 AM
- Idenix Pharmaceuticals (IDIX) starts patient enrollment in HELIX-2 — that's the DAA HCV combo comprising samatasvir and the JNJ co-developed protease inhibitor and polymerase inhibitor simeprevir and TMC647055.
- The Phase 2 study will evaluate efficacy, safety and tolerability of the combo in treatment-naïve or relapsed (after interferon and ribavirin) GT1 HCV patients. (PR)
- In other company news, IDIX has filed two patent infringement lawsuits against Gilead (GILD) tied to methods of treating the HCV using 2'-methyl nucleosides.
- Here's IDIX: "[The company] is seeking a declaration that GILD's imminent distribution, importation, use, sale or offer to sell drugs containing sofosbuvir, a 2'-methyl nucleoside compound, infringes IDIX's patents." (PR)
Nov. 27, 2013, 2:58 PM
- In addition to the $2.47B it will pay to settle some 8K lawsuits tied to recalled hip implants, Johnson & Johnson (JNJ -0.1%) will pay between $500M to $1B in order to "reimburse insurers for some costs of hip-removal surgeries known as revisions," Bloomberg says, citing a confidential communication.
- The total cost to resolve the DePuy claims is expected to exceed $4B, although one University of Richmond professor cited by Bloomberg thinks the total could be far higher: "When everything is all said and done, JNJ may wind up paying double that $4B to resolve all current and future litigation over those devices."
- See also: JNJ confirms $2.47B settlement, JNJ to settle artificial hip lawsuits
Nov. 25, 2013, 4:03 PM
- The most popular shorts according to Goldman's Hedge Fund Monitor which analyzes the positions of 783 funds with $1.6T in assets (in reverse order, i.e. the last in this list is the most heavily shorted): SYY, KO, TGT, BMY, SNDK, UPS, SLB, GE, CVX, PFE, CAT, COP, EMC, PG, NFLX, WMT, JNJ, DIS, CRM, VZ, IBM, XOM, T, GILD, INTC.
- A quick scan finds Netflix making both the top 25 list of most heavily shorted and the top 20 list of most concentrated longs. List of 20 longs is here.
Nov. 24, 2013, 2:59 AM
- The FDA has approved Johnson & Johnson's (JNJ) and Medivir's (MVRBF) simeprevir pill for the treatment of chronic hepatitis C.
- The agency authorized that the drug, to be called Olysio, be used with other medicines.
- Olysio is part of a new wave of Hepatitis C treatments to be developed, with Gilead (GILD) and Bristol-Myers Squibb (BMY) among other companies that are working on such drugs.
- Analysts have forecast that Olysio will generate sales of almost $450M in 2016. (PR)
Nov. 22, 2013, 7:07 AM
- Sanofi's (SNY) and Regeneron's (REGN) Sarilumab injectable antibody for treating rheumatoid arthritis performed well in a Phase III trial of 1,200 patients when combined with the standard oral treatment methotrexate.
- The combo eased symptoms, including pain, improved physical function, and slowed the progression of the disease.
- The study is one of two Phase III trials planned for Sarilumab.
- Analysts estimate that the drug could generate revenue of €579M ($780M) by 2020. It would compete with Roche's (RHHBY) Actemra and potentially with treatments being developed by AbbVie (ABBV), Johnson & Johnson (JNJ) and Bristol-Myers Squibb Co. (BMY). (PR)
- Meanwhile, Regeneron's Eylea has received approval in Japan for the treatment of macular edema following central retinal vein occlusion, a common vascular disease among the elderly caused by a blockage of one of the small veins that carry blood away from the retina. Regeneron is working with Bayer (BAYZF) on non-U.S. sales of Eylea. (PR)
Nov. 20, 2013, 10:26 AM
- Daiichi Sankyo's (DSKYF) edoxaban again proves comparable to warfarin in late stage clinicals.
- In a study of patients with A-fib, 1.5% of those given warfarin experienced a stroke versus 1.18% of those given the highest dose of edoxaban and 1.6% of those given the lower dose.
- Bleeding was less common in those given edoxaban.
- There were also fewer deaths among edoxaban patients.
- Despite the data, some say there isn't enough evidence to warrant wholesale adoption: "The absolute risk reduction is small," a professor at McMaster University’s Department of Medicine tells Bloomberg.
- Competitors: PFE and BMY's Eliquis and JNJ's Xarelto.
- Daiichi Sankyo's (DSKYF) edoxaban again proves comparable to warfarin in late stage clinicals.
Nov. 20, 2013, 9:18 AM
- Vertex Pharmaceuticals (VRTX) sells its Incivo royalty rights to co-developer Janssen (JNJ) .
- Janssen will pay $152M in cash to VRTX in Q4 and, starting next year, will stop making royalty payments on the protease inhibitor.
- Janssen now has "sole authority to execute Incivo marketing and promotion activities" in Europe and other regions. (PR)
- Q3 sales of Incivek missed consensus by a wide margin and triggered workforce reductions at VRTX, although some analysts noted that the news wasn't really all that surprising.
- VRTX is increasing its FY13 cash guidance to >$1.4B.
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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