Johnson & Johnson (NYSE: JNJ) is in the news after the company said its CFO will step down. Irrespective of the executive changes, let’s dig deeper and analyze Johnson & Johnson stock and see why it’s worth buying.
Johnson & Johnson is swiftly diversifying its revenue stream amid challenges in the traditional consumer products division.
Johnson & Johnson (NYSE: JNJ) now accounts for roughly half of its revenue from its pharmaceutical business arm. The consumer products division is presenting challenges because of the entry of low-cost players, e-commerce and sales of small vendors on social media.
Johnson & Johnson’s pharmaceutical business’ operating income has increased by a whopping 25% in the last 12 months, mainly due to the company’s performance in the oncology area. Johnson & Johnson (NYSE: JNJ) Darzalex has crossed $1 billion in annual sales. The drug is now available in Europe and Japan. Imbruvica and Zytiga are also growing and gaining traction worldwide. Johnson & Johnson’s pipeline of drugs is very strong. The company has at least 8 oncology drugs that are currently in late stages of development and registration in the US and Europe. The company is also working on cardiovascular drugs, including XARELTO. Johnson & Johnson is also developing several immunology drugs and vaccines. At least 10 drugs are expected to be launched within the next 3 years. Each of these drugs are expected to reach $1 billion annual sales. Analysts also think that Actellion, which was acquired by Johnson & Johnson (NYSE: JNJ) for $30 billion, will provide a huge growth momentum to the company.
Johnson & Johnson (NYSE: JNJ) is an excellent dividend stock. The company has increased its dividend for 55 consecutive years. For the first quarter of 2018, the company announced a cash dividend of $0.84 per share, payable on March 13.
Johnson & Johnson is divesting smaller business segments to focus on more profitable business arms. In 2017, about 22% of the total sales came from the products that are launched within the last five years. Earlier this month, Johnson & Johnson (NYSE: JNJ) said it received a $2.1 billion binding offer from private equity firm Platinum Equity for its LifeScan glucose monitoring business. The company has until June 15 to respond. Johnson & Johnson was mulling over selling LifeScan, Animas Corporation, and Calibra Medical since early last year. The company’s Diabetes Care franchise revenue declined 9.7% in 2017 to $1.6 billion. The company also plans to close its Animas Corporation diabetes care unit and insulin pump business.