COMPANY DESCRIPTION

Johnson & Johnson is a holding company. Through its subsidiaries, Co. engages in three business segments. The Consumer segment includes products used in the baby care, skin care, oral care, wound care and women's health care fields, and nutritional and over-the-counter pharmaceutical products, and wellness and prevention platforms. The Pharmaceutical segment includes products in the areas of anti-infective, antipsychotic, contraceptive, gastrointestinal, hematology, immunology, infectious diseases, neurology, oncology, pain management, thrombosis and vaccines. The Medical Devices and Diagnostics segment includes products used principally by physicians, nurses, hospitals, and clinics.

 

ECONOMIC MOAT

JNJ has dug a large moat supported by intellectual property in the drug group, switching costs in the device segment, and strong brand power from the consumer group.  J&J diverse operations are another strength. Johnson & Johnson's R&D efforts support its robust revenue base. 

 

OUTLOOK

J&J’s pharmaceutical business, has delivered tremendous top- and bottom-line growth throughout the year. Both new and existing drugs contributed to the group's results, although most of the credit goes to J&J's new hepatitis C drug OLYSIO. Consumer and Medical Devices segments struggled to generate growth over the last 12 months but Pharmaceutical business ought to continue to report solid top-line figures.  Longer-term total-return potential is decent, thanks in large part to the above-average dividend yield, 

CLICK THE BULL TO RETURN TO RESEARCH HOME PAGE

STRENGTHS

  • Leadership position in diverse healthcare segments

  • Strong R&D enabling J&J to launch innovative products

  • Robust performance by all three business segments

  • Strong cash position providing J&J financial flexibility for further expansion 

WEAKNESSES

  • Manufacturing and quality issues in OTC products

  • Product recalls may dent J&J’s brand image 

THREATS

  • Healthcare reform in the US could negatively impact J&J's profitability

  • Cutbacks in healthcare spending may affect J&J's product sales growth 

OPPORTUNITIES

  • Lucrative distribution and collaboration agreements

  • Further expansion in emerging healthcare markets 

The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.  

 

The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

$130