Johnson & Johnson Is Not Overvalued - This Company Could Have 35% Upside From Here
- 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.
Dec. 3, 2014, 10:01 AM
Nov. 24, 2014, 8:40 AM
- Tetraphase Pharmaceuticals (NASDAQ:TTPH) is reportedly considering selling itself after being approached by interested suitors. Sources say the acquirer could be Acetelion (OTCPK:ALIOF) (OTC:ALIOY) or Roche (OTCQX:RHHBY).
- The attraction is Tetraphase's antibiotic eravacycline, currently in Phase 3 development. Both oral and IV formulations of the drug have demonstrated higher dose response rates than Johnson & Johnson's (NYSE:JNJ) Levaquin (levofloxacin) for the treatment of complicated urinary tract infections. In the Ignite-2 study, patients receiving 200 mg eravacycline IV-to-oral doses achieved a response rate of 70.8% while patients receiving 250 mg IV-to-oral doses achieved 64.3%, both significantly ahead of Levaquin's 52.2% response rate.
- A trial comparing eravacycline to Merck's (NYSE:MRK) Invanz (ertapenem) for the treatment of complicated intra-abdominal infections is underway.
- TTPH is up 18% premarket on light volume.
- Previously: Tetraphase completes eravacycline Phase 3 enrollment
Nov. 7, 2014, 9:52 AM| 7 Comments
Sep. 30, 2014, 8:45 AM
- Johnson & Johnson (NYSE:JNJ) acquires privately-held clinical stage biopharmaceutical firm Alios BioPharma for $1.75B in cash.
- Alios develops therapies for viral diseases. Its lead product is AL-8176, an orally administered antiviral therapy in Phase 2 clinicals for the treatment of infants with respiratory syncytial virus (RSV).
- Janssen Pharmaceuticals R&D Chief William N Hait, M.D., Ph.D. says, "We are excited that this acquisition will enable us to explore treatment options for a number of viral infections, including RSV, the last of the major pediatric diseases with no available preventive therapy."
Sep. 24, 2014, 9:38 AM
- Colgate-Palmolive (NYSE:CL) is an attractive acquisition target with its core products seeing increasing demand in developing nations, reasons Bloomberg.
- Despite the company's large size, its broad distribution network could push a buyer to stretch the wallet a bit.
- A large balance sheet and a global reach would be needed to contemplate a Colgate-Palmolive takeover. Unilever (NYSE:UL) and Johnson & Johnson (NYSE:JNJ) might fit the bill, note analysts.
Aug. 28, 2014, 6:08 PM
- Johnson & Johnson (NYSE:JNJ) is beginning the process of seeking a buyer for its Cordis unit that makes medical devices including stents and catheters, WSJ reports.
- Cordis reportedly could fetch $1.5B-$2B and is expected to attract interest from P-E firms and other health care companies.
- A sale would mark the latest divestiture for JNJ, which is looking to shed slower-growth businesses and reduce annual costs by $1B; JNJ said in 2011 it would leave the cardiac stent business after years of falling sales and market share.
Aug. 22, 2014, 11:21 AM
- Johnson & Johnson (JNJ -0.7%) invests $20M in the form of a convertible note in regenerative medicine company ViaCyte in exchange for a future equity stake and the rights to its type 1 diabetes combination product candidate VC-01.
- VC-01 works by loading pancreatic progenitor cells into a proprietary device that is implanted under the skin. The progenitor cells then mature into insulin-producing cells that assist the under-producing pancreas.
Jun. 12, 2014, 4:16 PM
- Privately-held biosimilar developer Epirus Biopharmaceuticals acquires Zalicus (ZLCS +38.9%) in an all-stock deal. The post-merger firm will be named Epirus Biopharmaceuticals. Current ZLCS shareholders will own ~19% of the combined enterprise. Their proportion could go down as low as 14% if Zalicus' cash position falls below $9M at closing.
- Epirus's pipeline includes biosimilars for Janssen's (JNJ -0.8%) Remicade, AbbVie's (ABBV -1.1%) Humira and Genentech's (RHHBY -0.6%) Avastin.
May. 11, 2014, 2:30 AM
- Sanofi (SNY), Johnson & Johnson (JNJ) and other major pharmaceutical companies have rebuffed Allergan's (AGN) inquiries as to whether they would be interested in buying the botox maker, Bloomberg reports.
- Sanofi isn't interested, while J&J is concerned about the problems of combining the two biggest makers of breast implants in the U.S. Allergan has also approached GlaxoSmithKline (GSK) and Novartis (NVS).
- Allergan contacted the possible suitors as it's not happy with an acquisition offer of $45.7B from Valent (VRX) that is being supported by Bill Ackman's Pershing Square.
- Some of the firms that Allergan has approached would possibly buy parts of the company, but not the whole business.
Apr. 29, 2014, 9:49 AM
- Allergan (AGN +0.6%) is holding early-stage talks with Sanofi (SNY) and Johnson & Johnson (JNJ) to see if they're interested in topping Valeant's (VRX) $45.7B bid for the Botox maker, Bloomberg reports.
- Sanofi and J&J are mulling their options, although it's not clear whether they are interested.
- Bayer has also been contacted, but it's focusing on trying to win an auction for Merck's over-the-counter medicines operations.
Mar. 10, 2014, 9:05 AM
- Johnson & Johnson (JNJ) has agreed to sell the global rights to its K-Y brand of intimate lubricants to Reckitt Benckiser (RBGLY).
- While the price of the deal wasn't provided, Reckitt did say that K-Y had 2013 sales of over $100M, the majority of which was generated in the U.S. Canada and Brazil.
- K-Y adds to Reckitt's Durex brand.
- The transaction doesn't include staff or fixed assets. (PR)
Jan. 16, 2014, 8:01 AM
- Carlyle (CG) confirms that it has agreed to acquire Johnson & Johnson's (JNJ +0.3%) Ortho-Clinical Diagnostics (OCD) business for $4.15B.
- "This transaction is a result of our disciplined approach to portfolio management in order to achieve the greatest value for Johnson & Johnson," J&J CEO Alex Gorsky says.
- OCD provides products for screening, diagnosing, monitoring and confirming diseases, including blood-screening equipment and laboratory blood tests. It's a smallish player in a market led by Roche, Siemens and Abbott Labs. (PR)
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. 13, 2013, 4:27 PM| 3 Comments
Nov. 8, 2013, 7:44 AM
- Johnson & Johnson (JNJ) is set to open a new round of bidding on about November 11, reports Reuters, and Blackstone (BX) and Danaher (DHR) would be competing against other P-E players like Bain, CVC Capital, BC Partners, and Carlyle Group (CG).
- The unit reported sales of $2B in its most recent fiscal year and could draw a bid of more than $4B.
Sep. 6, 2013, 1:55 PM
- Johnson & Johnson (JNJ +0.7%) is making the rounds to companies that might be interested in buying its blood-testing division, which could fetch around $5B.
- JNJ's Ortho Clinical Diagnostics unit makes tests that can reveal a patient's blood type and screen for viruses like HIV and hepatitis C. It also makes tests that help diagnose a heart attack and assess damage to the heart.
- The testing business is part of a $46B world-wide market for in vitro diagnostics that is growing 6% - 7% a year.
- A potential deal could be wrapped up by as early as the year's end.
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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