Johnson & Johnson (JNJ): New Drugs and Better Manufacturing Make This Stock a Buy

The following points differentiate J&J from its competitors:

  • 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 (NYSE:JNJ)’s products should benefit from the increase in health-care needs.
  • The company has launched an industry-leading amount of new potential blockbusters, including Xarelto in cardiovascular disease and Zytiga in oncology.
  • New psoriasis drug Stelara is posting a very strong launch and should develop into a blockbuster by the end of 2013, which should help reinvigorate growth for the company’s drug division.

Bottom line

J&J’s diabetes drug Invokana is launching at a trajectory that is exceeding the expectations. Also, recently launched cancer drug Zytiga is holding off competition better . Overall, it is expected that annual sales growth will average 3% during the next 10 years, as strong growth in new pipeline drugs and the Synthes acquisition should offset some patent losses in the pharmaceutical division and near-term weakness in the consumer division.

Ahsan Aslam Khan has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson.

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