I started accumulating Johnson & Johnson (NYSE: JNJ) as one of my health sector picks as it seems to be an excellent company and one of the most respected ones out of all U.S corporations (like Berkshire Hathaway).
It did not first hit my screens, but I took a look at it because Warren Buffett has purchased it to BRK's portfolio and it is one of the major holdings BRK has via common shares. His has paid on average 60,42 USD per share. JNJ is now trading at 64,76 USD.
Unlike pure pharmaseutical companies, JNJ has actually three legs: Pharma, Medical devices/ diagnostics and consumer segment. Thefore, sales in long run is not as much affected by patent expirations, which all of the big pharmas will suffer in the next five years in a major way.
By typical valuation methods (P/E, P/S, P/B) it certainly is not cheap, but not expensive either. I would call it fairly priced. Also, compared to most other pharmas, it is low on debt which is allways a good thing.
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