Is Johnson & Johnson Enticing After Recent Headlines?

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With shares of Johnson & Johnson (NYSE:JNJ) trading around $93, is JNJ an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Johnson & Johnson engages in the research and development, manufacturing, and sale of various products in the healthcare field worldwide. The company operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. The company offers a range of products used in general care, women’s health fields, nutritional and anti-infective, contraceptive, gastrointestinal, oncology, pain management, and vaccines. It also offers products to treat cardiovascular disease, orthopedic and neurological products, blood glucose monitoring and insulin delivery products, and general surgery products. Through its wide variety of health care products, Johnson & Johnson is able to support consumers and medical businesses around the world that continue to demand improved products.

Johnson & Johnson reported fourth-quarter profit that beat analysts’ estimates as demand for the company’s newest drugs accelerated. Net income gained 37 percent to $3.52 billion, or $1.23 a share, from $2.57 billion, or 91 cents, a year earlier, the New Brunswick, New Jersey-based company said today in a statement. Earnings excluding one-time items beat by 4 cents the $1.20 average of 16 analysts’ estimates compiled by Bloomberg. J&J has brought new medicines to the market the past two years while it integrated the 2012 acquisition of closely held device maker Synthes Inc., the largest purchase in company history.

Last week, the company received a $4.15 billion offer for its lone diagnostics division from Carlyle Group LP, following competitors such as Pfizer Inc. in divesting units that aren’t market leaders. “Proceeds from the diagnostic division sale could spur more mergers and acquisitions and stock buybacks,” said Glenn Novarro, an analyst with RBC Capital Markets in New York, in a note. “With the integration of Synthes now largely behind Johnson & Johnson, we believe the company could become more aggressive in 2014.”

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