Some Thoughts On JNJ and Abbott Labs

By Douglas A. McIntyre Published Jan 28, 9:19PM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

By Vitaliy Katsenelson, CFA

January 26, 2007

It seems that 2007 should be a brighter year for Johnson & Johnson (NYSE JNJ). In 2006 the company faced major drug expirations which dampened revenue growth.
I really like the Pfizer’s (PFE) consumer business acquisition. Despite having a fairly good product line, Pfizer Inc was a pharmaceutical company that happened to have consumer products which came with the Warner Lambert acquisition. JNJ on the other hand has a culture of running diverse healthcare and consumer businesses.
It reminds me of 3M Company (NYSE MMM), as there is a synergy between different operating units as they share their R&D findings.
JNJ has a greater global consumer distribution network than Pfizer, therefore, it will be able to increase sales of PFE’s consumer unit by taking the products to places that they’ve not gone before (sounds Star Treckish, doesn’t it?)
Abbott Laboratories (ABT) received an incredible price (34 times operating earnings) for its diagnostic unit that was sold to General Electric (NYSE GE) (great job!).
I always looked at ABT as a mini-JNJ; it is a diversified healthcare company which is not heavily dependent on blockbusters. The company had a good quarter and should have a good next year. It is trading at about 18x earnings, higher valuation than JNJ’s 15x earnings, but it should have a bit higher growth rate.

http://www.contrarianedge.com/

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.