J&J (JNJ) Has Solid Defense as Offense Begins Falling into Place - Barron's
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Price: $146.82 -1.15%
Overall Analyst Rating:
NEUTRAL (
Up)
Dividend Yield: 3.4%
EPS Growth %: +1.1%
Overall Analyst Rating:
NEUTRAL (
Up)Dividend Yield: 3.4%
EPS Growth %: +1.1%
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Johnson & Johnson (NYSE: JNJ) shares are higher amid a bullish call by Barron's late Thursday, saying the conglomerate can offer both offensive and defensive plays for investors' portfolios.
Share appreciation has been muted over the last few years, rising just 12 percent since 2010...half the performance of broader markets. J&J has been hampered by product recalls, patent expiration, and the lousy broader economy.
But, last week J&J completed the $21 billion acquisition of Synthes. In addition, the company said the deal will be immediately accretive to its bottom line.
Analysts also shared the sentiment, with Jefferies, Raymond James, and JPMorgan all upgrading J&J on June 13th.
Recent share movement has put J&J with a P/E ratio at 12 times next year's expected earnings. It's dividend of 61 cents per quarter currently boasts a yield of 3.7 percent for investors.
Barron's notes how new CEO Alex Gorsky faces challenges, one of the biggest being J&J's consumer products segment, which has seen sales fall 7 percent since 2008, to $14.8 billion. It's likely that J&J might be able to see more upside in the segment next year.
Currently, the Street is looking for fiscal 2013 EPS of $5.51 next year, up 7 percent from 2012's outlook and the largest year-over-year growth seen in EPS since 2008.
For its Synthes deal, J&J got a little creative. It used its Ireland-based Janssen Pharmaceuticals to enter the accelerated buyback of $12.9 billion shares. This helped J&J to avoid issuing stock and also taking a big tax hit in the U.S. Previously expected to trim 2012 GAAP EPS by 22 cents, the deal is now expected to add 3 cents to 5 cents in 2012 and 10 cents to 15 cents in 2013.
To be sure, J&J still has a lot to deal with; there's no guarantee products will be a hit, it has to close a settlement for illegal Risperdal marketing practices, other lawsuits might be pending, and economic headwinds in Europe and the U.S. continue to pressure the medical device industry.
Given that Europe might shape up and J&J has already taken charges for the Risperdal suit, which its close to settling, there may be a nice upturn for J&J over the next year or two. Otherwise, investors are certainly being paid to wait with J&J's generous dividend and its history of increases will help play some defense while its offense gets back in gear.
Shares are up about 0.5 percent Friday afternoon.
Share appreciation has been muted over the last few years, rising just 12 percent since 2010...half the performance of broader markets. J&J has been hampered by product recalls, patent expiration, and the lousy broader economy.
But, last week J&J completed the $21 billion acquisition of Synthes. In addition, the company said the deal will be immediately accretive to its bottom line.
Analysts also shared the sentiment, with Jefferies, Raymond James, and JPMorgan all upgrading J&J on June 13th.
Recent share movement has put J&J with a P/E ratio at 12 times next year's expected earnings. It's dividend of 61 cents per quarter currently boasts a yield of 3.7 percent for investors.
Barron's notes how new CEO Alex Gorsky faces challenges, one of the biggest being J&J's consumer products segment, which has seen sales fall 7 percent since 2008, to $14.8 billion. It's likely that J&J might be able to see more upside in the segment next year.
Currently, the Street is looking for fiscal 2013 EPS of $5.51 next year, up 7 percent from 2012's outlook and the largest year-over-year growth seen in EPS since 2008.
For its Synthes deal, J&J got a little creative. It used its Ireland-based Janssen Pharmaceuticals to enter the accelerated buyback of $12.9 billion shares. This helped J&J to avoid issuing stock and also taking a big tax hit in the U.S. Previously expected to trim 2012 GAAP EPS by 22 cents, the deal is now expected to add 3 cents to 5 cents in 2012 and 10 cents to 15 cents in 2013.
To be sure, J&J still has a lot to deal with; there's no guarantee products will be a hit, it has to close a settlement for illegal Risperdal marketing practices, other lawsuits might be pending, and economic headwinds in Europe and the U.S. continue to pressure the medical device industry.
Given that Europe might shape up and J&J has already taken charges for the Risperdal suit, which its close to settling, there may be a nice upturn for J&J over the next year or two. Otherwise, investors are certainly being paid to wait with J&J's generous dividend and its history of increases will help play some defense while its offense gets back in gear.
Shares are up about 0.5 percent Friday afternoon.
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