Michael Grogan • Today, 7:11 AM
Johnson & Johnson Is Not Overvalued - This Company Could Have 35% Upside From HereMichael Grogan • Today, 7:11 AM
- I disagree that Johnson & Johnson (JNJ) is overvalued.
- Should the company achieve a 10% growth rate in dividends and earnings year-on-year, we could well see a 35% upside from current levels.
- In my opinion, Johnson & Johnson is uniquely positioned to capitalise on growth in emerging markets.
Johnson & Johnson: No Real Earnings Growth Since 2007; And Don't Ignore Special Items
- Johnson & Johnson has achieved significant and sustained growth for over a century.
- But detailed analysis shows no real growth in either revenue or earnings over the last 6 to 8 years. JNJ has virtually stood still for this period.
- Adjusting for “Special Items” is a potential trap if these costs are not viewed as being of a real and ongoing nature.
Johnson & Johnson: 'Slightly Overvalued' Is No Reason To Sell
- Recently an author indicated that Johnson & Johnson was slightly overvalued, further suggesting this would be a reason to sell.
- This article looks at this ideology generally, bringing attention to the potential for mental folly.
- It’s important to recognize one’s limitations, as forecasting provides an imperfect range of possibilities.
Johnson & Johnson Is Slightly Overvalued, Time To Sell This Drug Maker
- JNJ's share price is overvalued by 8% relative to its fair intrinsic value.
- JNJ's outlook for growth has significantly decelerated, and it is too big to succeed.
- JNJ still has a strong financial position and solid dividend growth.
Johnson & Johnson Q4 Results: Focusing On The Controllable Factors
- JNJ reported its 4Q14 financial results with EPS $1.27, up 2.4% from the same quarter a year earlier.
- The sales declined 0.6% to $18.3bn due to FX headwinds. Sales could have shown 3.9% growth on a constant currency basis.
- The company continues to invest in its future growth drivers.
Update: Johnson & Johnson - Slightly Higher Valuation But Still Solid
- Johnson & Johnson announced full-year 2014 earnings results.
- The company continues to show improvement.
- Although the valuation is higher today as compared to last year, shares still offer a reasonable opportunity in a solid company.
Johnson & Johnson Finding Growth A Little Harder Now
- Johnson & Johnson posts a broad-based miss, with weakness in pharma undermining margins and devices still struggling to log meaningful revenue momentum.
- Johnson & Johnson's robust cash generation can support ongoing dealmaking to augment the long-term prospects of the drug and device businesses.
- Should healthcare stocks pull back, or the market overreact to what is likely to be a tougher stretch in JNJ's drug business, these shares would be an attractive long-term buy.
Update: Johnson & Johnson Drops On Compressed Margins, But For The Wrong Reasons
- JNJ saw some substantial negative impacts from changes in exchange rates.
- The year-over-year comparison on a GAAP basis looks terrible, but that was largely a taxation issue.
- The pre-tax margins under GAAP were slightly compressed, but the compression was tied to increased R&D spending.
- The results of decreased margins were in line with my expectations, but excluding R&D the margins improved.
- My bearish thesis of underperformance for JNJ is softened by the R&D, but remains intact due to expectations on headwinds from exchange rates.
- J&J sold off 3% after reporting 2014 results, and is about 10% off its 52-week high, even though the company realized strong growth across its key markets.
- The market is irrationally punishing J&J for unfavorable currency fluctuations. But currencies are outside a company's control, and should not take precedence over core fundamentals.
- J&J's business remains strong, and thanks to its recent dip, the stock is attractive to both value and income investors.
Johnson & Johnson: 31 Consecutive EPS Increases & Counting
- Johnson & Johnson's full year and 4th quarter results came out this morning.
- Johnson & Johnson saw EPS increase 8.2% for its full year 2014.
- The company continues to see strong growth in its Worldwide Pharmaceutical segment.
Will Johnson & Johnson Top The Whisper Number This Quarter?
- The whisper number is $1.29, three cents ahead of the analysts' estimate.
- JNJ has a 62% positive surprise history (having topped the whisper in 32 of the 52 earnings reports for which we have data).
- The overall average post earnings price move is "as expected" but limited (beat the whisper number and see limited strength, miss and see limited weakness) when the company reports earnings.
- Johnson & Johnson (JNJ) is slated to report 4Q 2014 earnings before the opening bell on Tuesday, January 20th.
- Adjusted Earnings Per Share: The current Street estimate is $1.26 (range $1.21 to $1.29).
- Revenues: Analysts expect an increase of 1.1% y/y to $18.56 bln (range $18.29 bln to $18.90 bln).
The Next Stock I Would Build A Retirement Portfolio Upon At Any Age
- Dependability of continuous dividends paid and increased creates a more secure financial future no matter what age you start a portfolio.
- A dividend aristocrat has proven its ability to reward shareholders for more than a quarter of a century.
- When a dividend aristocrat stock is in the heart of an ongoing growth industry, the financial rewards can be spectacular.
- Recently I detailed how one might go about generating $100 per month from AT&T.
- This article looks at the same process for Johnson & Johnson, a lower-yielding, but faster-growing company.
- In the end it comes down to your lasting preference and specific goals.
Have Johnson & Johnson Shares Pretty Much Peaked For 2015?
- JNJ was wise not to listen to Goldman in 2012.
- But the landscape has changed.
- Should they revisit that recommendation in 2015?
- JNJ is one of the best run companies in the world - with business segment diversification and global diversification.
- JNJ is a dividend champion that has paid and raised dividends for 52 years. The 5-yr DGR stands at 7.4%.
- The changing global demographics make JNJ one of the best positioned companies in the world.
Johnson & Johnson: Well Positioned In The Healthcare Industry
- Johnson & Johnson is a leader in the pharmaceutical, medical device and consumer products industries.
- In mid-October the company announced third quarter sales of $18.5 billion, up 5.1% when compared to the third quarter of 2013, with domestic sales increasing 11.6%.
- The company increased its earnings guidance for full-year 2014 to $5.92 to $5.97 per share.
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.
Oct. 22, 2014, 4:46 AM
- Johnson & Johnson (NYSE:JNJ) will begin testing an Ebola vaccine in humans in January, and plans to have 250K doses of the experimental vaccine ready for use in clinical trials in May.
- The drug will combine a shot from the company's Janssen unit with one developed by Bavarian Nordic (OTCPK:BVNRY).
- J&J will invest about $200M to study and expand production of the vaccine, and aims to produce 1M doses next year.
Oct. 21, 2014, 10:52 AM
- The FDA accepts Eli Lilly's NDA for empagliflozin plus immediate-release metformin hydrochloride for the treatment of adults with type 2 diabetes (T2D). The product is part of the Lilly/Boehringer Ingelheim Diabetes alliance portfolio.
- Empagliflozin is a sodium glucose co-transporter-2 inhibitor which removes excess glucose through the urine by blocking glucose reabsorption in the kidney. Metformin decreases the production of glucose in the liver and its absorption in the intestine and improves the body's ability to utilize glucose.
- The FDA approved Jardiance (empagliflozin) as an adjunct to diet and exercise to improve glycemic control in adults with T2D in August 2014. Metformin has been in clinical use for many years.
- Diabetes-related tickers: (JNJ +0.4%)(OTCQB:ISLT)(OTCQB:BTHE +20%)(VTAE +2.5%)(NVO +0.5%)(MRK +0.9%)(NASDAQ:VKTX)(HPTX +0.4%)(ABT +1.2%)(OTCPK:TKPHF)(OTCPK:TKPYY -0.5%)(MDT +1.7%)(SNY -0.2%)(OTCQB:SNYNF -0.5%)(MNKD +2.4%)(ALR +1.4%)(TNDM +3%)
Oct. 21, 2014, 7:32 AM
- The Dermatologic and Ophthalmic Drugs Advisory Committee votes unanimously in favor of approving Novartis' (NYSE:NVS) interleukin-17A inhibitor secukinumab for the treatment of adult patients with moderate-to-severe plaque psoriasis who are candidates for systemic therapy. A final decision by the FDA is expected in early 2015.
- Novartis has also submitted its regulatory application with the European Medicines Agency. A decision is expected in late 2014 to early 2015.
- Psoriasis-related tickers: (NYSE:JNJ) (NASDAQ:DERM) (NYSE:MRK) (NASDAQ:CELG) (NASDAQ:IDRA) (NYSE:HSP) (NYSEMKT:CANF) (NASDAQ:AMGN) (NYSE:AZN) (NYSE:PFE)
Oct. 20, 2014, 4:37 PM
- Janssen Research & Development (JNJ +0.5%) strategic partner Pharmacyclics (PCYC +2.3%) submits an sNDA to the FDA for Imbruvica (ibrutinib) for the treatment of Waldenstrom's macroglobulinemia (WM), a rare type of B-cell lymphoma with no treatment options in the U.S. If approved, it will be the fourth indication for the product.
- The FDA granted Breakthrough Therapy Designation to Imbruvica for WM in February 2013.
Oct. 20, 2014, 10:40 AM
- Laboratory Corporation of America (LH -0.2%) launches its HIV GenoSure Archive, the first laboratory test that helps clinicians optimize antiretroviral (ARV) drug regimens for virally suppressed HIV patients. The test was developed using the Next Generation Sequencing Platform (NGS).
- Previous lab testing to guide ARV drug selection required higher viral loads than many HIV patients have. GenoSure Archive is performed by amplifying cell-associated HIV-1 DNA from infected cells in whole blood samples and then analyzing the polymerase region using NGS methods. The assay is analytically validated to identify mutations associated with resistance to all members of the most widely used ARV drug classes.
- HIV-related tickers: (ABBV +1.2%)(GILD +1.6%)(BMY +0.1%)(PFE -0.2%)(GSK -0.3%)(ABT +0.2%)(JNJ +0.1%)(PGNX +3%)(MRK +0.1%)(OTCQX:RHHBY +0.6%)
Oct. 17, 2014, 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.
Oct. 17, 2014, 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.
Oct. 16, 2014, 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%)
Oct. 16, 2014, 7:46 AM
Oct. 15, 2014, 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.
Oct. 14, 2014, 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%.
Oct. 14, 2014, 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.
Oct. 14, 2014, 7:48 AM| Comment!
Oct. 13, 2014, 5:30 PM
Oct. 13, 2014, 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.
Oct. 10, 2014, 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.
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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