December 20, 2016
By Alex Keown, BioSpace.com Breaking News Staff
NEW YORK – If you’re looking for a last minute holiday gift for a loved one, analysts at The Street suggest picking up some shares of Johnson & Johnson to add to a stocking.
The healthcare giant is a rather safe bet as far as investments go due to its incredibly wide portfolio of products. Throughout a year that has been unkind to many biotech stocks, The Street’s Shubhankar Adhikari said J&J’s “nearly 13 percent stock price gain this year and its dependable dividend yield of about 2.7 percent provide more reasons to invest in the redoubtable company.” While there are certainly risks in investing and even more so in healthcare, Adhikari said Johnson & Johnson should “maintain its unwavering ascent next year.”
Outside of its big brand names like Band-Aid and Tylenol, J&J has some strong drivers in its pharmaceutical pipeline, including cancer drug Imbruvica and Stelara, an anti-inflammatory drug. Johnson & Johnson is also looking to seek regulatory approval for 10 late-stage experimental treatments by the end of 2019. Some of those 10 experimental drugs include expanded use of multiple myeloma drug Darzalex. Another drug the company plans to file with the FDA for is the anti-inflammatory guselkumab, while another is imetelstat, a treatment for myelofibrosis and myelodysplastic syndromes.
Although the company will likely see challenges in the foreign markets, Adhikari said the probability of growth makes the company a good investment.
“J&J’s massive cash-churning business with levered free cash flow over the past 12 months of more than $17 billion on top of its $40 billion cash chest, should both grow,” Adhikari said. “Earnings per share are expected to increase nearly 6.2 percent next year, and J&J is set to continue to deliver returns.”
Shares of Johnson & Johnson are currently trading at $115.68, down from its 2016 high of $125.40 in August.
One positive for J&J that investors should consider is how cautious the company is when it approaches possible mergers and acquisitions. The company does not have a strong history of making big deals like other pharma companies do, which has left it with a chunk of available cash. Earlier this month, J&J walked away from a possible deal with Swiss-based Actelion Pharmaceuticals . J&J said in a statement the deal would not create “adequate value” for its shareholders.
J&J stood tall earlier this month after Pfizer ’s Xtandi failed to meet top-line results when compared to Johnson & Johnson’s Zytiga in patients with chemotherapy-naive metastatic castration-resistant prostate cancer.
Johnson & Johnson started the year with a possibility of divesting itself from its Athens, Ga.-based subsidiary, Noramco, a manufacturer of active pharmaceutical ingredients, for up to $800 million.
The company did see a bit of a setback in November after sirukumab, the rheumatoid arthritis drug it is co-developing with GlaxoSmithKline , demonstrated mixed-results when compared to AbbVie ’s blockbuster drug Humira. Data from a Phase III head-to-head trial showed that in some instances certain dosing levels of sirukumab outperformed Humira, but in other comparisons sirukumab did not do as well.
