Johnson & Johnson (NYSE:JNJ) seems to be a safe investment because its product line and business model is diversified. The company plans to launch ten new drugs over the next few years which have a potential to reach $1 billion in annual sales. It is set to announce third quarter results next month, and we believe the stock would soar following the quarterly results.
Johnson & Johnson recently got approval for Tremfya, which is a drug to treat moderate to severe plaque psoriasis.
The company is benefiting from the declining value of dollar, as J&J has huge penetration outside the US. The company managed to gain a whopping $1.2 billion from currency exchange in just six months. Analysts think that the company will continue to see expansion of its revenue in the remaining months of 2017 due to currency tailwinds.
Johnson & Johnson (NYSE:JNJ) managed to crush analyst estimates in the most recently quarter, but the company slashed its 2017 guidance which caused some concerns among the investors. The compnay now expects its operational revenue to come in between $75.9 billion to $76.2 billion, compared to the previously outlined guidance of $76.1 billion-$76.8 billion. J&J also expects its pre-tax operating margin to have a slightly downward bias. Sales growth is expected to be at 2.5%-3.0% range, versus the growth rate of 3.0% to 3.5% projection earlier.
Johnson & Johnson completed the acquisition of Actelion Ltd (SIX: ATLN) in June. The company bought the Swiss biotech firm for $30 billion in cash. Actelion specializes in pulmonary arterial hypertension. The acquisition was welcomed by the Street as J&J needs to boost its pipeline. J&J’s cardiovascular segment only has two drugs: Xarelto and Invokana. Invokana has been under intense pressure and the company is heavily discounting the drug worldwide. The addition of Actelion will provide much needed relief for the company’s cardiovascular division in the future. The company’s pharma segment which accounts for 45% of the total revenue grew by just 1% in the second quarter.
Analysts think that Johnson & Johnson (NYSE:JNJ) should focus on its Beauty segment, which increased by 11% in the second quarter. J&J can leverage the growth opportunities in this segment by leveraging its market share potential.
Johnson & Johnson (NYSE:JNJ) other biggest strength is its Oncology business. The segment reported double-digit growth in the second quarter, mainly due to strong sales of Darzalex and Imbruvia. The company is also working on several blockbuster products in this segment.
As of September 8, Johnson & Johnson (NYSE:JNJ) PE ratio is 22.1, much better than that of Pfizer (24.8), Merck (34.6) and Novartis (30.6).