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No. of Recommendations: 34
having read all the helpful notes on this board (thanks badsin!) along with several things on the FC board (thanks jammer), I'm trying to come up with a list of positives and negatives associated with this company. Any help would be appreciated:

*Long Term History is Incredible
*Margins are at an All-time High
*Existing drugs have many alternative uses
*Relatively modest option grants
*Buys Shares
*Acquisitions add to growth rate
*Remicade (1.46b) cannot be easily duplicated and could thus be most important product
*10-11% spending on RD
*Powerful Cypher stent growth for next 6 to 18 months
*Consumer Product business growth accelerated in Q1
*PE based on 04 Value Line estimate of $2.95 is 17.8, well below the 25 median
*1.8% dividend and always growing
*tons of free cash flow can be used for divi, buybacks, and acquisitions
*AAA credit rating
*Solid corporate governance; reasonable salaries (though compensation comes from option grants primarily); good citizen; admired company
*Prospects for medical devices, sans stents, still appear promising (am relying on others for this opinion)

*Reached 36b in sales; law of large numbers
*Margins are at an all-time high (can they go higher?)
*Margins are driven entirely by pharma growth (62% operating profit)
*Growth driver Procit/Eprex (4.3b trailing sales) faces competition and will suffer price cuts
*Durgesic (1.3b) loses patent protection 04-05
*Remicade faces competition from Humira & Enbrel & maybe from insurance companies not willing to pay for it
*Risperdahl (2.2b) up against cleaner side-effect drug from BMY called Abilify
*Sporanox (0.5b)& Analgesics (0.3b) in decline
*Competitors coming for Cypher products
*Contraceptives (1.0b) facing generic competition
*Consumer business will be lucky to sustain 5% growth rates
*dividend payout represents 2.9b in cash already
*Very difficult to judge prospects for MDD
*Very difficult to judge pricings for acquisitions
*Pension plan is underfunded by 1.3b, even after a 1b contribution; pension plan return rate is an aggressive 9%
*Insiders seem willing to nibble at $40 levels (in 02); current price is higher
*it appears the big buyback last year was done near a price of $59-$60; Q1 buyback was 339m vs. 1.9b despite price being lower than 59-60 much of the time
*Pipeline is considered "weak"; not sure what this is based on but many seem to repeat this

Bull case seems to be based on valuation, long-term history
Bear case seems to be based on near term challenges without giving credit to that long term history.

Initial Impression: I think that JNJ discounts some of the negatives with the current price (even 10% growth in 05 and 06 gets you to $3.57, or 14.7x the current price) but there are significant near term challenges ahead which could pressure those very high margins. Thus, I'm tempted to buy something but not much more than a token at this time.

feeback requested!
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