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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%.
Wed, Jul. 30, 7:16 PM
- Johnson & Johnson (NYSE:JNJ) starts a worldwide withdrawal of its laparascopic power morcellators -- devices for removing fibroid uterine growths -- on concerns that their spinning blades risk spreading cancer elsewhere in the body.
- The company's Ethicon unit suspended sales and distribution in April; now JNJ is asking customers to return already-purchased devices.
Mon, Jul. 28, 12:34 PM
- The FDA approves a label expansion for Janssen Biotech's (JNJ -0.2%) Imbruvica (ibrutinib) to include patients with chronic lymphocytic leukemia (CLL) who carry a 17p deletion, a genetic malformation associated with poor responses to standard treatment.
- Imbruvica is currently approved to treat adults with CLL who have received at least one prior treatment and adults with mantle cell lymphoma who have received at least one prior treatment.
Fri, Jul. 25, 12:05 PM
- The EMA's Committee for Medicinal Products for Human Use (CHMP) adopt a positive opinion supporting approval of Imbruvica (ibrutinib) as a treatment for adult patients with relapsed or refractory mantle cell lymphoma (MCL) or adult patients with chronic lymphocytic leukemia (CLL) who have received at least one prior therapy or as a first-line treatment in patients with the 17p deletion or TP53 mutation who are unsuitable for chemo-immunotherapy.
- Ibrutinib is being co-developed by Johnson & Johnson (JNJ -0.2%) unit Janssen-Cilag International NV and Pharmacyclics Switzerland GmbH. Once approved, Janssen will market it exclusively in EMEA (Europe, Middle East, Africa) and co-promote it in the U.S.
- A final decision from the European Commission usually takes ~3 months.
Tue, Jul. 22, 1:40 PM
- In a Phase 3 trial comparing a once-daily dose of Solzentry (maraviroc) (PFE +0.7%) with Prezista (darunavir) (JNJ +1.1%) and Norvir (ritonavir) (ABBV +0.2%) to emtricitabine/tenofir with darunavir plus ritonavir (DRV/r) in antiretroviral-naive patients, the maraviroc combination failed to achieve its primary endpoint of -10% non-inferiority (no worse than) at Week 48.
- The proportion of study subjects who were virologically suppressed (HIV-1 RNA < 50 copies/ml) was 77.3% for the maraviroc cohort and 86.8% for the DRV/r group.
- The study results were presented by ViiV Healthcare at the 20th International AIDS Congress in Melbourne, Australia earlier today. ViiV is a specialist company focused on HIV that was established in late 2009 by Glaxo (GSK -0.1%) and Pfizer.
- ViiV Healthcare CSO and CMO Dr. John Pottage says, "Athough this investigational two-drug regimen was inferior to the three-drug regimen in this study, maraviroc remains a valuable antiretroviral therapy when used in combination with other antiretrovirals and dosed twice daily in adults with confirmed CCR5-tropic HIV."
Mon, Jul. 21, 5:26 PM
- The BOD of J & J (JNJ -0.5%) authorizes the repurchase of up to $5B of the company's common stock. Shares will be bought at management's discretion on the open market or via privately negotiated transactions. There is no time limit for the program.
- Reacquired shares will be used for general corporate purposes.
Mon, Jul. 21, 11:31 AM
Thu, Jul. 17, 11:02 AM
- An analysis by Express Scripts (ESRX +0.1%) shows the enormous potential costs confronting state Medicaid programs of paying for Gilead's (GILD +1.1%) HCV treatment Sovaldi. The $84,000 full regimen tab will put substantial budgetary pressure on many states like CA ($6.8B), TX ($5.4B) and FL (3.8B) if every HCV sufferer is treated.
- Express Scripts estimates that more than 750K Medicaid patients have chronic HCV infections (total cost to treat with Sovaldi + ribavirin or Olysio (JNJ -0.5%) = ~$55B).
- Despite Gilead's assertions that Sovaldi actually saves money by curing HCV and avoiding the costs of liver failure, Congress has launched an investigation into its pricing rationale. The company's previously announced plan to sell Sovaldi to Egypt for $900 potentially complicates its position.
Tue, Jul. 15, 8:04 AM
- Johnson & Johnson (NYSE:JNJ) Q2 results: Revenues: Consumer: $3,744M (+2.4%), Pharmaceutical: $8,509M (+21.1%), Med Devices & Diagnostics: $7,242M (+0.7%); Global Business: $19,495M (+9.1%).
- COGS: $6,039M (+10.0%); R&D Expense: $2,005M (+3.0%); SG&A Expense: $5,481M (+2.0%); Net Income: $4,326M (+12.9%); EPS: $1.51 (+13.5%).
- Gross Profit: $13,456M (+8.6%); COGS%: 31.0% (+0.9%); Gross Margin%: 69.0% (-0.4%); Operating Profit: $5,970 (+17.8%); Operating Earnings Yield: 30.6% (+8.1%); Net Earnings Yield: 22.2% (+3.5%).
- EPS guidance raised to $5.85 - 5.92 from $5.80 - 5.90.
- Press release
Tue, Jul. 15, 7:46 AM| 3 Comments
Mon, Jul. 14, 5:30 PM
Mon, Jul. 14, 1:19 PM
- Johnson & Johnson's (JNJ +0.2%) Janssen Pharmaceuticals submits an sNDA for an expanded indication for Invega Sustenna (paliperidone palmitate). The label change, if approved, would include data showing significantly delayed time to relapse in patients treated with Invega Sustenna compared to selected oral antipsychotic therapies in the treatment of schizophrenia.
- In a 444-patient clinical trial, whose time to treatment failure was the primary endpoint, Invega Sustenna patients' delay of relapse was 190 days longer compared to other oral antipsychotics. The results were statistically significant.
- The FDA first approved the product in July 2009 as a treatment for schizophrenia.
Fri, Jul. 11, 1:47 PM
- Dr. Andrew Brill had to recuse himself from the FDA's Obstetrics and Gynecology Devices Ad Comm meeting this week due to his relationship with Johnson & Johnson's (JNJ -0.6%) Ethicon unit. It paid Dr. Brill ~$213,000 last year in consulting fees.
- The Committee is meeting this week to discuss the future use of power morcellators used in hysterectomies. Some experts believe the devices assist the spread of cancer by disseminating undetected cancer cells as it divides and removes tissue. Ethicon markets such a device under the trade name Gynecare Morcellex.
Thu, Jul. 3, 8:28 AM
- In response to a request from the FDA, (TEVA) files a citizen petition (CP) on the approvability of generic versions of Copaxone (glatiramer acetate injection). The agency wanted a CP in order to facilitate public review and comment on new scientific data on gene expression. This will allow Teva to comment publicly on the views and opinions of others and will create an administrative record that the FDA may use as a basis for future decisions.
- Teva's CP provides new scientific data on gene expression and evidence to support arguments that active ingredient sameness, immunogenicity and bioequivalence in generic offerings are similar but not the same as Copaxone. The company says that competitive offerings should use the same gene expression markers and biological pathways to demonstrate sameness and be evaluated in full-scale clinical trials.
- One possible outcome of Teva's aggressive efforts to maintain a moat around Copaxone is that it may give it more empathy for branded drug makers when it goes after incumbent products with its own generic versions.
- Related tickers: (MNK) (ACT) (JNJ) (MYL) (MNTA) (NVS)
Fri, Jun. 27, 10:31 AM
- Janssen-Cilag International NV (JNJ -0.4%) submits a type II variation (EMA's version of an sNDA) to expand the label of Velcade (bortezomib) for use in combination with rituximab, cyclophosphamide, doxorubicin and prednisone for the treatment of adult patients with previously untreated Mantle Cell Lymphoma (MCL). Velcade is currently approved as a treatment, in combination with other agents, for Multiple Myeloma.
- In a clinical trial, the Velcade combination therapy demonstrated a statistically significant improvement in progression-free survival (PFS) of 59% (24.7 months vs. 14.4 months) compared to R-CHOP therapy.
Tue, Jun. 24, 8:43 AM
- Covidien (COV) files a patent infringement suit in the U.S. District Court in Connecticut against Ethicon Endo-Surgery (JNJ). It alleges that Ethicon's Harmonic ACE+7 Shears infringes on three COV patents. The same court ruled in favor of COV regarding the validity of the three patents in an earlier suit involving other Ethicon ultrasonic surgical products and awarded COV $175M. The award is under appeal.
Wed, Jun. 18, 9:15 AM
- Vertex Pharmaceuticals (VRTX) licenses its influenza drug candidate VX-787 to J&J (JNJ) unit Janssen Pharmaceuticals. Under the terms of the agreement, Vertex receives an upfront payment of $30M, additional development and commercial milestone payments and royalties on future sales.
- VX-787 works by directly inhibiting the replication of the flu virus. In a Phase 2a study, the drug met its primary endpoint of statistically significant improvements in viral and clinical measurements.
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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