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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%.
Fri, Oct. 17, 9:18 AM
- The European Commission approves Pharmacyclics (NASDAQ:PCYC) and Janssen's (NYSE:JNJ) Imbruvica (ibrutinib) for the treatment of adult patients with relapsed or refractory mantle cell lymphoma or adult patients with chronic lymphocytic leukemia (CLL) who have received at least one prior therapy or in first-line CLL patients in the presence of 17p deletion or TP53 mutation who are unsuitable for chemotherapy.
- The FDA approved Imbuvica in July.
Fri, Oct. 17, 8:34 AM
- The U.S. District Court for the District of Connecticut grants a preliminary injunction against Ethicon Endo-Surgery (NYSE:JNJ) preventing it from manufacturing, marketing and selling its Harmonic ACE +7 ultrasonic energy device. The injunction is the result of Covidien's (NYSE:COV) lawsuit that alleges the product infringes on three of its patents.
- Ethicon's Harmonic devices were found to infringe the same patents in a prior suit in the same court. Ethicon is currently appealing the court's damages award of $175M.
Thu, Oct. 16, 11:46 AM
- The Dermatologic and Ophthalmic Drugs Advisory Committee meets on Monday, October 20 to review Novartis' (NVS -1.7%) BLA for secukinumab, a human mAb, for the treatment of adults with moderate-to-sever plaque psoriasis who are candidates for systemic therapy or phototherapy.
- Briefing docs
- Psoriasis-related tickers: (JNJ -1%)(DERM -5%)(MRK -2.2%)(CELG -0.9%)(IDRA +6.8%)(HSP +1.1%)(CANF)(AMGN -1.5%)(AZN -1.1%)(PFE -1.3%)
Thu, Oct. 16, 7:46 AM
Wed, Oct. 15, 1:11 PM
- Janssen-Cilag International NV (JNJ +0.3%) files a Type II Variation with the European Medicines Agency seeking clearance to expand the label of Stelara (ustekinumab) to include treatment of moderate-to-severe plaque psoriasis in pediatric patients ages 12 to 17 years old who are inadequately controlled by or are intolerant to other systemic therapies or phototherapies.
- In the EU, Stelara is currently approved for the treatment of moderate-to-severe plaque psoriasis in adults who failed to respond to or who have a contraindication to or are intolerant to other systemic therapies including ciclosporin, methotrexate or PUVA. It also is cleared for the treatment of active psoriatic arthritis, alone or in combination with methotrexate, in adults who responded inadequately to DMARD therapy.
Tue, Oct. 14, 8:37 AM
- Johnson & Johnson (NYSE:JNJ) Q3 results by selected line item:
- Consumer: Leaders: OTC Intl: +6.2%; OTC WW: +4.5%; Oral Care - U.S.: +4.2%; Oral Care Intl: +3.2%. Laggards: Women's Health - U.S.: -89.6%; Women's Health WW: -20.3%; Women's Health Intl: -4.2%; Wound Care/Other Intl: -3.2%.
- Pharmaceuticals: Leaders: Infectious Diseases WW: +90.1%; Edurant U.S.: +75.0%; Xarelto U.S.: +68.3%; Edurant Intl: +58.3%; Stelara U.S.: +52.8%; Oncology U.S.: +34.4%. Laggards: Incivo Intl: -50.0%; Other Infectious Diseases Intl: -41.5%; Risperdal Consta Intl: -16.5%; Other Neuroscience U.S.: -13.9%; Concerta/Methylphenidate U.S.: -10.5%.
- Medical Devices and Diagnostics: Leaders: Cardiovascular Care U.S.: +12.8%; Cardiovascular Care Intl: +5.2%; Orthopaedics U.S.: +3.2%; Diabetes Care: +3.0%. Laggards: Diagnostics WW: -90.4%; Diagnostics Intl: -81.4%; Vision Care U.S.: -12.5%; Vision Care WW: -5.9%; Surgical Care U.S.: -3.9%.
Tue, Oct. 14, 8:14 AM
- Johnson & Johnson (NYSE:JNJ) Q3 results: Total Revenues: $18,467M (+5.1%); Consumer: $3,589M (-0.6%); Pharmaceutical: $8,307M (+18.1%); Med Device & Diagnostics: $6,571M (-5.2%).
- Revenue by geographic segment: U.S.: $8,842M (+11.6%); Europe: $4,446M (-0.7%); Western Hemisphere ex-U.S.: $1,820M (-1.2%); Asia-Pacific/Africa: $3,359M (+0.9%); International: $9,625M (-0.3%); Worldwide: $18,467 (+5.1%).
- COGS: $5,399M (+1.0%); R&D Expense: $2,023M (-0.9%); SG&A Expense: $5,468M (+2.9%); Net Income: $4,749M (+59.3%); EPS: $1.66 (+59.6%).
- Gross Profit: $13,068M (+6.8%); COGS: 29.2% (-3.9%); Gross Margin: 70.8% (+1.7%); Operating Profit: $5,577M (+14.4%); Operating Earnings Yield: 30.2% (+8.9%); Net Earnings Yield: 25.7% (+51.6%).
- 2014 EPS guidance raised to $5.92 - 5.97 from $5.85 - 5.92.
Tue, Oct. 14, 7:48 AM| Comment!
Mon, Oct. 13, 5:30 PM
Mon, Oct. 13, 9:07 AM
- Bristol-Myers Squibb (NYSE:BMY), Pharmacyclics (NASDAQ:PCYC) and Janssen Research & Development (NYSE:JNJ) enter into a clinical trial collaboration to evaluate the safety, tolerability and preliminary efficacy of BMY's Opdivo (nivolumab) in combination with Imbruvica (ibrutinib) as treatment for patients with non-Hodgkin lymphoma, diffuse larger B-cell lymphoma, follicular lymphoma and chronic lymphocytic leukemia.
- The clinical study will be conducted by Janssen.
- No additional details about the collaboration are disclosed.
Fri, Oct. 10, 1:43 PM
- The FDA approves Gilead Sciences' (GILD -0.3%) Harvoni for the treatment of chronic hepatitis C genotype 1 infection.
- Harvoni is a combination of ledipasvir and sofosbuvir. It is the first approved regimen that does not require administration with interferon or ribavirin.
- This is the third HCV drug approved in the last 12 months. The agency cleared Janssen's (JNJ +0.3%) Oysio (simeprevir) in November 2013 and Sovaldi in December 2013.
- Price: $94,500/12 weeks, $63,000/8 weeks.
Tue, Oct. 7, 9:54 AM
- Menlo Park, CA-based Virobay (VBAY) is set for its IPO of 3.8M shares at $12 - 14.
- The clinical stage biopharmaceutical firm develops drugs based on its cysteine cathepsin platform. Cysteine cathepsins are important enzymes in the biology of many diseases. The company believes that inhibiting these enzymes produces safer, more effective therapies. It currently focuses its efforts on inhibitors of cathepsins S and B.
- Its lead product candidates are cathepsin S inhibitors: VBY-036 for neuropathic pain and Crohn's disease and VBY-891 for psoriasis. Phase 2 development for all three indications should commence in 1H 2015 which means that meaningful product revenues are far in the distance.
- In 2013, the company generated $9.9M in collaboration revenue. Its operating loss was ($2.3M). In 1H 2015, collaboration revenue dropped to $1.1M and the loss from operations increased to ($3.6M).
- Crohn's disease-related tickers: (ABBV -1.6%)(MRK -1.2%)(RDHL +0.4%)(VBLX)(OTCPK:TKPHF)(OTCPK:TKPYY)(CNDO +1.1%)(OTCQB:SNGX)(PSTI +2.3%)
- Neuropathic pain-related tickers: (DARA -4.4%)(AVNR -3.4%)(ZLCS +0.9%)(IPCI -2%)(BLRX -1.9%)(MNOV +0.6%)(PFE -0.3%)(OTCPK:NGSX)
- Psoriasis-related tickers: (DERM -0.5%)(NVS -2.5%)(CELG -1.4%)(LLY -1.3%)(CANF -2.3%)(IDRA -1.4%)(JNJ -0.8%)(XNPT +0.5%)(HSP -0.2%)
Mon, Oct. 6, 1:55 PM
- Privately-held Danbury, CT-based Perosphere enters into a third collaboration agreement with Daiichi Sankyo to study PER977, Perosphere's investigational anticoagulant reversal agent, in Phase 3 trials with edoxaban, Daiichi's investigational oral, once-daily factor Xa-inhibitor.
- In Phase 1 and 2 studies, PER977 showed that it directly binds to heparin as well as circulating direct factor Xa- and IIa-inhibitors reversing their anticoagulant effect. PER977 does not bind to blood coagulation factors or other blood proteins. In healthy volunteers, it reverses anticoagulant activity after a single IV dose of 100 mg - 300 mg and does not require an extended infusion in order to maintain the reversal.
- Under the terms of the agreement, Perosphere will seek FDA and EMA approval of PER977 to reverse anticoagulant activity of edoxaban and commercialize PER977 in the U.S. and EU. It retains full worldwide commercial rights to PER977. Perosphere will receive an upfront payment from Daiichi Sankyo as well as clinical development-related milestones. It plans to submit an NDA to the FDA by June 2015.
- Related tickers: (JNJ -0.4%)(OTCPK:BAYRY -0.4%)(OTCPK:BAYZF +0.1%)(PFE -0.3%)(BAX)(BMY -0.3%)(ISIS -1.9%)(PTLA)(AZN -0.1%)(MRK -0.6%)
Thu, Oct. 2, 10:35 AM
- Thinly-traded nano cap GeoVax (OTCQB:GOVX +18.5%) announces that it has initiated an Ebola vaccine development program based on its DNA/MVA (modified vaccinia Ankara) platform.
- It will develop GOVX-E301 as a single dose vaccine to the ZEBOV strain of Ebola, which is the strain responsible for the current outbreak, and two-dose GOVX-E302 for routine immunization and protection against the three Ebola strains known to be lethal to humans.
- Related tickers: (TKMR -2.8%)([[SRPT] +2.4%)(BCRX +1.2%)(HEB -7.6%)(INO +0.5%)(NNVC -0.3%)(GSK -0.4%)(JNJ)(OTC:FUJIF)(OTCPK:FUJIY -1.4%)(NLNK -3.2%)(CMRX +0.3%)
Wed, Oct. 1, 10:05 AM
- In response to the ever-increasing risk of security breaches, the FDA issues final guidance for device makers entitled, "Content of Premarket Submissions for Management of Cybersecurity in Medical Devices." The agency recommends that device manufacturers consider cybersecurity risks at part of the design and development of their products and submit documentation to the FDA about the risks identified and the controls in place to mitigate them. The agency also recommends that companies submit their plans for patches and upgrades to device operating systems and medical software.
- The agency will hold a public workshop on October 21, 2014 to discuss how all the constituency groups can work together to improve cybersecurity in medical devices and protect the public health.
- ETFs: IBB, BIB, IRY, IXJ, BIS, DRGS
- Some related tickers: (MDT -0.2%)(BSX -0.9%)(STJ -0.3%)(ABT -0.6%)(JNJ -1.4%)(OTCQX:RHHBY +0.1%)
Wed, Oct. 1, 8:21 AM
- Yesterday, the U.S. Government released the first comprehensive disclosure of payments made by medical companies to doctors. Over the first five months of 2013, med firms paid $3.5B to doctors to fund items such as research, consulting, royalties to hospitals to help develop products and fees for speaking engagements. The monies were disbursed in two broad categories: research funding and fees to doctors for consulting and other non-research services.
- Roche's (OTCQX:RHHBY) Genentech unit led the way in the non-research category with $135M. Most of this (90%) went to a Southern California hospital network for royalties.
- Bristol-Myers Squibb (NYSE:BMY) was #1 in the research category with $329M which, according to the company, was largely the value of experimental medicines used in studies.
- Medtronic (NYSE:MDT) paid one unidentified doctor ~$3M who was among a group of six physicians paid at least $500K by the device maker. The company's total outlay for the period was $30.1M.
- Johnson & Johnson (NYSE:JNJ) paid $68M for non-research expenses.
- The disclosures, mandated by Obamacare, cover 4.4M payments to ~550K doctors and 1,360 teaching hospitals from August to December 2013.
- The disclosures are a bit controversial. Physicians complained that the government did not give them enough time to review the data to correct mistakes.
- ETFs: IBB, BIB, IRY, BIS, IXJ, DRGS
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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