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Analysis of Johnson & Johnson

Analysis of Johnson & Johnson

10 August 2022

Johnson & Johnson: it is necessary to wait for the signal 

A player of a huge scale, a structure of more than 250 subsidiaries, a vertically integrated holding consisting of the production of sanitary and hygienic goods, medicines, as well as medical and social equipment. This is Johnson & Johnson. The business earns from sales in the consumer segment of the market (17%), in the pharmaceutical (51%) and medical devices sector (32%). 

The company has relied on a diversified business model, which allows it to maintain stability in almost any market scenario. 

Johnson & Johnson has presented its quarterly report. Its strengths:

  • EPS of $2.59 per share, above expectations;
  • revenue +3.0% YoY to $24 billion;
  • pharmaceutical sector revenue +7% YoY to $13.3 billion.

There are weak spots – for example, a 1% reduction in sales of medical equipment by the sector in the second quarter to $6.9 billion. In addition, it is worth paying attention to the company’s reduction in expectations for adjusted net profit for 2022 to $10 per share, revenue to $93.3-94.3 billion. 

However, in general, the main reporting indicators came out better than forecasts, which allows us to maintain a positive outlook on the prospects of the company’s shares. 

The consensus estimate for Johnson & Johnson securities is $190-197 at the end of 2022.

On the daily chart, the MACD indicator is still declining in the negative zone and does not form a buy signal. The Stochastic oscillator is declining, approaching the oversold zone, after which it will be able to turn up and begin forming a buy signal. The technical picture does not yet give a clear signal for acquisitions, it is worth waiting for a more successful situation.

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    ARAVANA Capital management
    10 August 2022
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