Tags: JNJ | pharmaceuticals | Synthes | SYST

Johnson & Johnson Provides Stiff Defense

By    |   Monday, 19 Sep 2011 09:07 AM

With the economy in danger of falling back into recession, now is a great time to consider defensive stocks for your portfolio. Johnson & Johnson (JNJ), the world’s second biggest healthcare product maker, represents one of the top defensive plays available.

The company has a major presence in several different areas of the healthcare space, providing instant diversification. That includes prescription drugs, over-the-counter consumer healthcare products, and medical devices. No other healthcare company matches J&J’s reach.

Results have suffered recently from patent losses on drugs such as anti-psychotic Risperdal and anti-seizure Topamax. But the company received U.S. approvals in the second quarter for drugs to treat AIDS and prostate cancer.

Johnson & Johnson also took a hit from last year’s recalls of dozens of over-the-counter brands, led by Tylenol and Motrin. But that issue appears to be a thing of the past.

The medical device unit provides 40 percent of the company’s revenue. In April, J&J agreed to pay $21.3 billion — the biggest purchase in the company’s 125-year history — to buy Swiss medical equipment maker Synthes (SYST). The deal will make Johnson & Johnson the leading player in the $5.5 billion market for devices that help trauma victims.

R&D engine

The company has a strong focus on research and development, which should make it a leader in all of its market segments for years to come. That will help the company maintain its impressive free cash flow levels — almost 20 percent of sales.

J&J is looking to bounce back from the second quarter, when profit fell 20 percent from a year earlier to $2.78 billion. Revenue gained 8.3 percent to $16.6 billion.

Standard & Poor’s analyst Herman Saftlas has a four-star buy rating on Johnson & Johnson shares. “We believe JNJ's diversified sales base across drugs, medical devices and consumer products, along with its decentralized business model, has served it well in the past and should continue to do so in the years ahead,” he writes. The company next reports around Oct. 18.

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With the economy in danger of falling back into recession, now is a great time to consider defensive stocks for your portfolio. Johnson Johnson (JNJ), the world s second biggest healthcare product maker, represents one of the top defensive plays available. The company...
JNJ,pharmaceuticals,Synthes,SYST
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2011-07-19
Monday, 19 Sep 2011 09:07 AM
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