Equity prospects

Johnson & Johnson

John Royden, Head of Research


52 week high-low$144 - $109

Net yield2.38%

Hist / pros per21.5 - 19.0

Equity market cap$370,874m

Warren Buffet once said “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.” As one of very few pharmaceutical companies with AAA rated corporate balance sheets and an impressive record of steady earnings progression, Buffet could well have been talking about Johnson & Johnson.

It is therefore no surprise that they are in the line-up of potential suiters as Pfizer considers selling or spinning o  their Consumer Healthcare business. Management have bolstered rumours of a potential acquisition by stating that the consumer unit of a large corporation would be a “logical choice”.

Consumer Products is quite possibly the first thing that springs to mind when we think of Johnson & Johnson, but happens to be the smallest of their three main divisions. Baby Care and Band-Aid are but two of their recognisable products.

The Medical Devices division focuses on Surgery, Cardiovascular and Specialty solutions, and Orthopaedics and accounts for roughly one third of sales.

The largest division is Pharmaceuticals, which accounts for nearly a half of sales. Johnson & Johnson are global leaders in a large array of categories including Immunology, Infectious Diseases, Neuroscience, Oncology, and Cardiovascular and Metabolic Diseases. Aided by their Janssen Pharmaceuticals acquisition back in the 1960’s, they produce a number of blockbuster drugs which have sales well in excess of $1 billion a year.

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