Pharmaceutical Processing World

  • Home
  • Regulatory
    • Recalls
  • Pharmaceutical Processing
  • Facility
  • Supply Chain
  • Equipment and Materials
  • Contract Manufacturing
  • Resources
    • Voices
  • Advertise
  • SUBSCRIBE

Johnson & Johnson Shares Dip on Analyst Downgrade

By Pharmaceutical Processing | April 9, 2013

Shares of Johnson & Johnson fell Monday after a J.P. Morgan analyst downgraded the health care giant’s stock, saying it now trades at an 8 percent premium to the value of its parts and he expects the company to reduce its profit forecast.

Analyst Michael Weinstein wrote to investors that he downgraded Johnson & Johnson from “Overweight,” — or “Buy” — to “Hold” now because its shares have enjoyed a 30 percent run-up since last June, boosting the company’s market capitalization by $54 billion. That puts their valuation at a 16 percent premium to rival large pharmaceutical companies and a 12 percent premium to other big medical device makers.

Still, he increased his year-end price target for the shares from $77 to $83. The stock price has risen from just under $62 a share last June 1 — shortly after new CEO Alex Gorsky took over — to an all-time high of $82.95 earlier this month.

On Monday, shares declined 2.1 percent initially, then recovered somewhat. They were down 1.3 percent, or $1.07, at $80.97 in afternoon trading.

“While fundamentals have improved at J&J, at $82 we think this is much more reflected in the name,” Weinstein wrote, adding, “J&J’s facing a messy first quarter and a likely downward revision to 2013 guidance.”

He wrote that J&J’s first-quarter tax rate should be lower than expected because the federal government extended the research and development tax credit, but that revenue will be hurt by unfavorable exchange rates and by a couple of fewer selling days than in the year-ago quarter.

That should result in J&J missing analysts’ expectations for first-quarter revenue and lowering its profit forecast for the year by 5 cents to 10 cents per share, to a range of $5.25 to $5.40 a share, mainly due to the exchange rates, Weinstein wrote. J&J has already said it will take a charge of 4 cents per share due to Venezuela’s devaluation of its currency.

Weinstein expects J&J to top analysts’ first-quarter consensus of $1.38 per share by 3 cents, “because of the tax rate, cost controls and likely some one-time gains.”

Johnson & Johnson years ago derived roughly one-third of its revenue each from prescription drugs, devices and diagnostic tests, and consumer health products such as No More Tears baby shampoo. But the drug and device businesses, fueled partly by acquisitions, have been growing rapidly while consumer health sales have shrunk amid dozens of product recalls, delays as factories are upgraded and both problems keeping nonprescription medicines off store shelves.

The company now gets about 90 percent of its profit from prescription drugs and diagnostics, split almost evenly, and only about 10 percent from consumer health products such as pain relievers Tylenol and Motrin.

___

Follow Linda A. Johnson at http://twitter.com/LindaJ_onPharma

 

Related Articles Read More >

kobayashi pharmaceutical logo
Report: Japan health authorities investigate Kobayashi Pharmaceutical factory after five deaths
Disposable syringe and American currency on black background
PBMs increasingly under fire in drug-pricing battle
Johnson & Johnson logo
Timeline: Navigating Johnson & Johnson’s talc lawsuits and their stock performance impact
pharmaceutical industry. Production line machine conveyor with glass bottles ampoules at factory
5 core trends in drug recalls: An analysis of 2022 and Q1 2023
“ppw
EXPAND YOUR KNOWLEDGE AND STAY CONNECTED
Get the latest news, technologies, and developments in Pharmaceutical Processing.

DeviceTalks Tuesdays

DeviceTalks Tuesdays

MEDTECH 100 INDEX

Medtech 100 logo
Market Summary > Current Price
The MedTech 100 is a financial index calculated using the BIG100 companies covered in Medical Design and Outsourcing.
Pharmaceutical Processing World
  • Subscribe to our E-Newsletter
  • Contact Us
  • About Us
  • R&D World
  • Drug Delivery Business News
  • Drug Discovery & Development
  • DeviceTalks
  • MassDevice
  • Medical Design & Outsourcing
  • MEDICAL TUBING + EXTRUSION
  • Medical Design Sourcing
  • Medtech100 Index
  • R&D 100 Awards

Copyright © 2025 WTWH Media LLC. All Rights Reserved. The material on this site may not be reproduced, distributed, transmitted, cached or otherwise used, except with the prior written permission of WTWH Media
Privacy Policy | Advertising | About Us

Search Pharmaceutical Processing World

  • Home
  • Regulatory
    • Recalls
  • Pharmaceutical Processing
  • Facility
  • Supply Chain
  • Equipment and Materials
  • Contract Manufacturing
  • Resources
    • Voices
  • Advertise
  • SUBSCRIBE