Should You Hold Johnson & Johnson (JNJ)?

[View in browser]( [The Spill Logo] BROUGHT TO YOU BY: [Logo]( Proprietary Data Insights Financial Pros’ Top Pharma Stock Searches in the Last Month Rank Ticker Name Searches #1 [LLY]( Eli Lilly and Company 37 #2 [BIIB]( Biogen Inc 37 #3 [PFE]( Pfizer Inc 36 #4 [JNJ]( Johnson & Johnson 31 #5 [ABBV]( Abbvie Inc 14 #ad [Master the Art of Investing with The Juice!]( Brought to you by [Retirement Watch]( [Retirement Crisis: Seniors Face New Threat]( [Retirement Watch - Retirement Crisis: Seniors Face New Threat]( I’m writing to you about a congressional law that I believe poses a significant threat to the retirement savings of American seniors. This legislation, which I describe as one of the most devastating in my career, is designed to slash the value of 401(k)s, IRAs, including Roth IRAs, and pensions. As a result, retirees across the country are facing the prospect of substantial financial losses. However, there are proactive measures that retirees can take to protect themselves from the adverse effects of this law. [Here's how to safeguard a brighter financial future ]( Should You Hold Johnson & Johnson (JNJ)? These days, most drug stocks Eli Lilly (LLY), with its pipeline of weight loss drugs. So, it wasn’t much of a surprise when markets knocked down shares of Johnson & Johnson (JNJ) when the company reported results that beat on earnings but missed slightly on revenues. Like Pfizer (PFE), JNJ is watching its sales plunge from waning Covid vaccine demand. Yet, as that moves further into the rearview mirror, financial pros are looking hard at the financials, wondering if now is the time to step into JNJ. Here are our thoughts. Johnson & Johnson’s Business With a history extending back over 135 years, Johnson & Johnson has become a staple in many of our lives. Once a healthcare conglomerate, Johnson & Johnson spun off its consumer health business into a new company called Kenvue in late 2023. That left the remaining core segments: - Innovative Medicine (63% of total revenues) - Focuses on developing treatments for an array of complex diseases, leading the charge in medical innovation. - MedTech(37% of total revenues) - Provides cutting-edge technology that revolutionizes patient care, from surgery to orthopedics. Within the first category, overall sales continue to climb despite the drag from COVID-19 sales. Yet, Oncology sales continue to grow rapidly, accounting for one of the largest revenue items in this segment. [Highlights] Source: Q1 2024 Earnings Presentation On the other hand, MedTech is doing fantastic, with total sales up 4.5% YoY led by cardiovascular’s stellar 22.5% growth. [Highglights] Source: Q1 2024 Earnings Presentation Financials [Financials] Source: Stock Analysis Outside of the pandemic, JNJ’s sales have grown steadily, albeit slowly. In fact, it’s one of the steadiest pharma companies we’ve reviewed, with margins remarkably stable, especially free cash flow. Total debt is $30.4 billion with $22.9 billion in cash, a solid balance sheet given the typical free cash flow of around $20.0 billion annually. JNJ buys back around $5.0 billion in stock while paying $11.7 billion in dividends, giving a total effective yield of around 4.8%. Valuation [Valuation] Source: Seeking Alpha JNJ trades at a fairly cheap valuation compared to its peers. Its price-to-cash flow at 15.4x is the second lowest only to Abbvie’s (ABBV) 12.8x. And it runs the group's cheapest P/E ratios. Growth [Growth] Source: Seeking Alpha However, JNJ’s growth isn’t comparable to its peers. Its average growth over the three and five-year period is less than 1%. And the drag created by COVID-19 vaccines puts last year and the forward forecast slightly into negative territory when you account for exchange rates and other items. Profitability [Profit] Source: Seeking Alpha Despite its steady performance, JNJ’s margins aren’t always the best, save for its cash generation. So, its returns on equity, assets, and total capital are good but not great. [Google CEO: This Will Be Bigger Than Electricity]( Google's CEO Sundar Pichai says AI will have a more profound effect on society, "than electricity or fire." PwC - one of the world's leading technology consultants - projects AI will generate over $15.7 trillion in new wealth before 2030. That would make AI worth 7.5x the American internet economy. But if you're buying Microsoft or NVIDIA to profit - you're missing the big picture. After 50 years on Wall Street, I'm going public with another way to profit on the coming $7 trillion A.I. boom. It's an under-the-radar stock reshaping a projected $109 billion industry - And, I believe, has far more potential than the AI stocks most investors are focused on in the days ahead. [To get its name and ticker symbol for free - just click here.]([Ad] Our Opinion 6/10 JNJ is a steady company. But it’s not exciting. We don’t see a lot of growth here. Without that, you’re looking at a perpetual cash payer. That’s great and easy to value. But you only want to buy those stocks when they trade at deep discounts, which this is not at. 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