Johnson & JohnsonJNJ

Morningstar Rating

Stock Research and Analysis

by Damien Conover, CFA

Johnson & Johnson stands alone as a leader across the major health-care industries. The company maintains a diverse revenue base, a robust research pipeline, and exceptional cash-flow generation that together create a wide economic moat. Patent Read more

Bulls Say

Johnson & Johnson controls the top or number-two leadership spot in 70% of its products.

Its diverse health-care segments insulate the company from downturns in the economy, offering a defensive growth opportunity.

As the baby boom generation ages, the entire spectrum of Johnson & Johnson's products should benefit from the increase in health-care needs.

The company holds one of the best pipelines in the industry, led by new drugs for pain, arthritis, and cardiovascular disease.

The company is implementing a $10 billion share-repurchase program, signaling management's confidence in the stock. Read more

Bears Say

Patent expirations plague the pharmaceutical division in the near term, reducing growth and operating margins.

Drug-eluting stents, which were a growth engine in the medical device division, have come under fire as recent studies have questioned their benefits compared to lower-margin bare-metal stents.

Side-effect concerns, a more restrictive label, and reimbursement limitations should continue to impair Procrit's prospects.

Follow-on schizophrenia drug Invega has performed poorly since its recent launch, dimming the prospects for transferring sales of comparable drug Risperdal following the latter's patent loss.

If a public plan option exists in the final passage of U.S. health-care reform, several of Johnson & Johnson's products will probably lose significant pricing power over the long run. Read more

Strategy

Johnson & Johnson empowers its multiple operating lines and encourages entrepreneurial spirit. More than 250 firms operate independently under the Johnson & Johnson flag. The company has established Read more

Management

Bill Weldon has been chairman and CEO since 2002. He is only the sixth chairman in the company's 120-year history. Weldon's 38-year tenure at the company, serving in multiple divisions across the globe, gives him the experience needed to maneuver this Read more

Profile

Johnson & Johnson ranks as the world's largest and most diverse health-care company. The company comprises three divisions: pharmaceutical, medical devices and diagnostics, Read more

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