
NYSE:JNJ
This summary was created by AI, based on 12 opinions in the last 12 months.
Johnson & Johnson (JNJ) has been experiencing a transformative period, especially following the spinoff of its orthopedics division, allowing it to focus more on pharmaceuticals and medical devices. Experts have highlighted the company's strong drug pipeline and robust performance in its core pharmaceutical business, which has led to a significant increase in stock value this year. Despite some concerns regarding ongoing talcum powder litigation and its past underwhelming performance, many analysts believe the legal risks are diminishing. The stock is seen as a better long-term hold, with potential dividend growth, especially amidst a broader economic context affecting consumer products. Overall, JNJ is viewed as an attractive investment, particularly when bought on weakness, with the valuation appearing favorable due to its premium position in the healthcare sector.
JNJ vs. ABT Healthcare is in a more defensive space, moving up during the pandemic. Likes both. JNJ has a fairly nice dividend at 2.5%. 18x forward earnings for 8% growth. Performing decently, but underperforming the S&P. ABT is more in medical devices. Marginally underperforming since last March. 22x earnings with a higher growth rate of 14%. Bit more torque with ABT, and they're also in the Covid detection space. If he had to choose, it would be ABT.
Opportunity for Pfizer and J&J are solid. You give up some appreciation when you select a stock with higher yield. However, total return is the most important. There is more diversification with JNJ with medical supplies. Pfizer's partnership with BioNtech is positive. There is renewed chatter about drug price controls. Both offer good prospective.
This morning the news said that distribution has been halted in the US, so the stock is declining today. Like Pfzier, JNJ is seeing a one-time bump because of their vaccine. JNJ is struggling in their consumer business as consumers move to generic drugs, not branded. Also, litigation remains a cloud, referring to asbestos in its Baby Powder. There are other opportunities in healthcare, like Anthem, the insurer, or retailer CVS, or Abbvie trading at a reasonable PE and offers good growth.
JNJ vs. PG Valuation of 16-17x earnings is cheaper than PG. A healthcare company: medical devices, healthcare, pharma. PG is just consumer products, trading at 23x earnings. More opportunity in JNJ, with a caveat on the talc lawsuits. Medical device side should do well post-Covid. Dividends similar in the 2.5% range.