Johnson & Johnson stock traded above the 52-week high on Wednesday. JNJ stock was around 3.14%. The blue-chip stock has climbed 8.2% in the past three months, thanks in part to the successful launch of the soon-to-be-listed JNJ PARADIGM 3.0.
JNJ PARADIGM 3.0 is a data transfer system for collecting, storing, and delivering life science applications and clinical trial results. Research and development used its PARADIGM technology to develop Arimidex, one of the largest-selling type II beta-blockers on the market. The launch was a critical milestone for JNJ’s competitive position, attracting new players in the in-vitro diagnostic, drug development, and biotech markets. A market share of 6.7% and a 93% average price hike justifies the robust upgrades for JNJ PARADIGM from competing platforms like Lumion.
A company in the Medical Devices segment, JNJ has reduced costs in its revenue stream by 81.6% over the past five years. That should end up helping offset potential loss of sales from future recalls. It’s been a positive move, considering that (1) S&P Capital IQ expects net income growth to slow to about 4% in 2019, (2) net income is projected to grow 16.9% per year for the next five years, and (3) EBITDA margin at 47.5% is higher than the industry average at 42.5%.
After its wild and glamorous ride, JNJ stock is in a safe position to withstand potential market shifts. That makes this a good time to start buying.
The company’s marketing and research operations have had a disappointing recent two years. Pharmaceuticals revenues came in just above $17 billion in 2018, down 6.4% from a year earlier. Its total sales fell to $82.3 billion, down 7.7%.
Investors may want to wait and see how its growth prospects shape up going forward. The FDA proposal for new safety guidelines on short-term use of several drugs among the treatments for arthritis, cancer, and psoriasis comes at a time when JNJ may face some generic competition for drugs such as Simponi and Stelara. And it probably will be subject to FDA review for safety and efficacy for Xarelto, which launched its new U.S. health insurance formulary that says the drug would continue to be covered even if those plans meet certain benefits as specified in their contracts with JNJ. This could cause a setback for Xarelto sales. The risks and uncertainties are not enough to justify starting to trade.