Johnson & Johnson's Prospects in 2014

Johnson & Johnson had a strong year in 2013, but what about 2014? A rival bio-similar from Hospira threatens its largest drug by sales, Remicade. In addition, a weak medical device market has already been discussed by a company like General Electric. So, where next for Johnson & Johnson? The recent earnings results from Johnson & Johnson (NYSE: JNJ) were met with a near 2% sell-off on the day.

Looking into 2014, investors should focus on three things: 1. Acceleration in the economic recovery so medical device sales can pick up inline with an increase in surgical procedures. 2. Ongoing development of pharmaceutical sales, and activity to protect future market share for Remicade in Europe. and 3. An improvement in its international consumer products sales, as they only grew 3.1% operationally in 2013. Achieving two of the three things should provide for some upside surprise, and Johnson & Johnson needs it. On current analyst estimates, it trades on a valuation of 16 times forward earnings. The company also has only 6% and 7.4% earnings-per-share growth estimated in the next two years. This makes it look like a fairly valued stock.

Source: Motley Fool

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