Johnson & Johnson (JNJ) is one of the leaders in providing healthcare products world-wide. Consumer, pharmaceutical & medical devices and diagnostics are the three diversified segments, on which the company is operating. The current market price of the company is around $64, trading within its 52-highs and lows of $68.05 and $57.05 respectively. With market capitalization of around $176.41 billion, Johnson & Johnson depicts a price earnings ratio of $18.50, while its earnings per share are around $3.49. Over the past decade, Johnson & Johnson has demonstrated a stable return on equity ranging between approximately 25% and 29%. As a catalyst for revenue generation for the company, 'Synthes' acquisition is expected to be completed in the first half of 2012. Also known as the most consistent dividend paying corporate giant, Johnson & Johnson has paid increased dividends to its investors for forty-nine consecutive years since 1944. Johnson & Johnson has a dividend yield of approximately 3.50, while its dividend rate is a stable 2.28. Since 2002, the company's dividend payout has increased by 13% per year, which means doubling of dividend payment in approximately every five years. The market price of its stock is approximately 14 times its earnings. I would recommend Johnson & Johnson to be bought at its current market price with a long term perspective.
Pfizer (PFE) is one of the prominent global players in providing prescription as well as 'over the counter' human as well as animal medicines. In terms of sales, this New York based corporate giant is the world's largest pharmaceutical company. The stock currently trades at around $21, between its 52-week range of $22.17 and $16.63 respectively. With earnings per share of around $1.28, and a price earnings ratio of around $16.40, Pfizer has market capitalization of around $163.73. The company is now planning to streamline its pipeline activities as well as planning to revisit its research and development spending. On a more positive note, lies its acquisition of Wyeth , which is certain to render long-term benefits to the company coupled with its agreement with GlaxoSmithKline for development on treatment of HIV. The company is one of the best dividend payers, depicting a dividend yield of approximately 4.20%, while its stability in price per share is depicted in its beta of 0.7. Keeping earnings per share estimate of around $2.20 per share, Pfizer can reach a price target of $27 in a year's time. if one buys Pfizer at the current market price, coupled with the dividend income from the company, a return of approximately 25% is attainable. In my opinion, Pfizer should be bought at its current levels.
Abbott Laboratories (ABT) is one of the global leaders in the manufacture of drugs. Abbott Laboratories is currently trading at around $55, within its 52-week highs and lows of $56.84 and $45.60. The company has market capitalization of $85.93 billion. It has price earnings of around $18.30 and earnings per share of approximately $3. Its dividend yield is around 3.5%, with its dividend payout having been consistently increased for a period of 38 years. A number of acquisition deals along with appropriate licensing contracts have assured Abbott Laboratories to garner string of promising drugs in its portfolio. Likewise, the acquisition of Kos has improved Abbott's range of products, in rendering lipid management better. Also, the approval of TRICOR will aid the company in synergizing new formulation drugs within its portfolio. Moreover, as the company's pharmaceutical division accounts for approximately 50% of sales, it remains one of the attractive candidates for a takeover post spin off. In my opinion, purchasing stock of Abbott Laboratories at its current market rate is a good investment decision, with a long term perspective. At the year end, it will render the investor equities of two companies if he invests in Abbott laboratories as of today.
Merck (MRK) is a research based global drug manufacturer, currently trading at around $38. The stocks 52-week highs and lows ranged between $39.43 and $29.47, respectively. Merck & Co Inc. depicts a market capitalization of around $116 billion, with earnings per share of approximately $2, while its price earnings being poised at around $19. The company's earnings rose by 11% in the fourth quarter of 2011 depicting approximately $3 billion. In 2011, an overall increase of 10% posted the earnings to around $3.77 versus $3.42 earnings of 2010. With many complementary products in the pipeline of getting patented, Merck & Co Inc. has certainly acquired a strong array of products with its Schering acquisition. Moreover, the company benefits from flexibility in utilizing its finances, due to its strong cash balance. However, the expiry of its Cozaar and Hyzaar patents, with a prospective expiry of Singulair patent in 2012 would prove a set back to the company's cash in-flows. In my opinion, Merck & Co Inc. could be optimally purchased at around $30, with a medium term perspective.
Forest Laboratories ([b]FRX) [/b]specializes in the manufacture of therapeutic drugs for the cardiovascular and central nervous system. The current market price of the company is around $31, within a 52 week range of $40.52 and $28.47 respectively. With earnings per share of around $3.96, and price earnings of around $8, Forest Laboratories, Inc. has market capitalization of$8.37 billion. Forest Laboratories, Inc.has depicted strong returns on equity over the last decade, averaging around 23%. The company has performed well enough over a decade to garner 60% return on invested capital. However, the company is just trading at a mere 1.6 multiples of its book value. Forest Laboratories, Inc has benefited its investors by mode of stock repurchases, so as to render free cash flow to them. The major catalyst for company's positive outlook comes from its acquisition in Clinical Data Inc (“CDI”) for $1.3 billion net cash also, the approval of Viibryd, Clinical Data's major product, just less than a month before acquisition was certainly a definite plus for Forest Laboratories. In my opinion, Forest Laboratories could be purchased at its current level, with a medium term perspective.
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