Johnson & Johnson Leads the Dow's Leap

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Hopes for a deal to end Washington's political standoff have fueled the market's rally today, as the Dow Jones Industrial Average (DJINDICES: ^DJI  ) , after a middling start, has kicked into high gear in the afternoon. As of 2:30 p.m. EDT the Dow has picked up gains of almost 100 points. Johnson & Johnson (NYSE: JNJ  ) is leading the way for blue-chip stocks, which have mostly surged across the index today. Let's catch up on what you need to know.

Johnson & Johnson moves on up
Johnson & Johnson is up about 1.6% after Goldman Sachs raised the company's rating up to "Neutral" from "Sell." Most investor eyes are on the company's imminent earnings, however, as J&J is set to announce its most recent quarter's results next Tuesday.

What's on the docket for J&J? Analysts project the firm's earnings to rise modestly from a year ago, growing to $1.35 per share from the prior-year quarter's mark of $1.25. Analysts also expect revenue at the company to grow by 2%. It's not a huge jump by either metric, but J&J isn't a company that will wow investors with starry gains like those seen in other health care industries, such as biotech. Instead, this is a strong, steady firm that -- regardless of Tuesday's outcome -- is a solid pick for any portfolio's foundation.

J&J's pharmaceutical business has continued a steady march higher this year. The firm's bread-and-butter immunology drug Remicade continues its standout performance as one of big pharma's best-selling drugs. It has grown sales by 16.5% year over year through the first six months of the year, and J&J is on pace to reap more than $6 billion in revenue from the drug in 2013. Remicade won't last forever, but this drug's astronomical performance over the years is giving a cushion for some of J&J's other promising pharmaceuticals -- such as fast-growing likely blockbuster cancer treatment Zytiga -- time to develop into big hits.

The company's big pharma rival Pfizer (NYSE: PFE  ) isn't having such a good day, with shares down about 0.3% so far to rank among the Dow's most lackluster stocks. That downbeat performance has come after Pfizer announced so-so results from rheumatoid arthritis drug Xeljanz in a clinical study evaluating its use in treating psoriasis. Unfortunately for Xeljanz and Pfizer, the drug only performed as well as competing Amgen (NASDAQ: AMGN  ) drug Enbrel when used at a high dosage, as a low dose of Xeljanz failed to treat patients as effectively as Amgen's top seller.

Analysts still expect Xeljanz to reap sales of more than $1 billion some day for Pfizer, as its existing approval for RA should help it find a niche in a growing market. However, analysts are also pointing out that its impact in the psoriasis market now looks limited. For Amgen, Xeljanz's ho-hum trial results are a boost for a company that needs Enbrel to continue to serve as a solid revenue foundation as it develops new compounds for the future, although Amgen's stock has only inched higher by 0.9% today.

The path for your long-term financial success
One of the best parts of owning big pharma stocks like Pfizer and J&J is their attractive dividends, but smart investors know the importance of diversifying -- seeking high-yielding stocks from multiple industries. The Motley Fool's special free report "Secure Your Future With 9 Rock-Solid Dividend Stocks" outlines the Fool's favorite dependable dividend-paying stocks across all sectors. Grab your free copy by clicking here.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 2679135, ~/Articles/ArticleHandler.aspx, 4/18/2014 9:57:19 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

TREND TRACKER: Get Rich When the Web Goes Dark

It's time to say "goodbye" to your Internet! One bleeding-edge technology is about to put the World Wide Web to bed. And if you act right away, it could make you wildly rich. Experts are calling it the single largest business opportunity in the history of capitalism… The Economist is calling it "transformative"... but you'll probably just call it "how I made my millions." Big money is already on the move. Don't be too late to the party – find out the 1 stock to own when the Web goes dark.


Advertisement