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An analysis of Johnson & Johnson #JNJ, a US holding company that leads a group of more than 250 subsidiaries around the world manufacturing pharmaceuticals, sanitary and hygiene products and medical equipment.

An analysis of Johnson & Johnson #JNJ, a US holding company that leads a group of more than 250 subsidiaries around the world manufacturing pharmaceuticals, sanitary and hygiene products and medical equipment.

3 February 2021

Johnson & Johnson is an American holding company that leads a group of more than 250 subsidiaries around the world manufacturing drugs, sanitary and hygiene products and medical equipment (the latter is the world’s leading one). #JNJ can be considered the largest and most versatile healthcare company in the world. The business of the company consists of three divisions – pharmaceutical, medical equipment and consumer segments. Most of the cash flows come from the first two segments. The company sells most of its products in the United States. 

The list of products sold by #JNJ includes more than one hundred items. The company also actively invests in research and development (more than 14% of revenue over the last year). 

The main competitors of the company are large pharmaceutical companies such as Pfizer Inc, Merck & Co Inc and Abbvie Inc. 

Q4 Revenue: $ 22.5B (+ 9% YoY) Q4 Operating Income: $ 4.1B (-5% YoY) 

Q4 net income: $ 1.7B (-57% YoY) Earnings per share for the last quarter: $ 1.86, higher than the $ 1.82 forecast. 

The company’s operating indicators have suffered quite seriously during the pandemic. Distribution of revenue by business segment: 

Pharmaceutical – 51.43% 

Medical Devices – 31.64% 

Consumer – 16.94%

Current Quarter EPS Forecast: $ 2.33


The company looks locally overvalued. If there is a desire to buy shares, it makes sense to divide the volume of the proposed purchase into 3 parts and place limit orders at 155, 150, 147. It is not known how deep the correction will be.But if you do everything as described above, you will have a good entry with the targets of the previous high (175), and maybe even higher.

The company is stable in terms of debt burden – the ratio of net debt to EBITDA is 0.26, which is quite a good indicator for the industry. 

The company also has good profitability indicators among its competitors: gross margin – 66%, operating margin – 24%, net margin – 18%. 

The company is a dividend aristocrat, having been increasing dividend payments to its shareholders for over 50 years. Forward yield, however, remains low at 2.4%. Thus, #JNJ is a mature company that has a dominant position in the pharmaceutical market. The company actively invests in research and development, which will help it remain the industry leader for a long time to come.

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