Why You Shouldn't Ignore Johnson & Johnson
The year 2020 has been full of surprises. Growth stocks, which are usually the first to get battered during economic downturns, have performed exceptionally well, while many stable and mature companies have been poor performers.
Historically, Johnson & Johnson (NYSE: JNJ) has been considered a safe stock with a strong commitment to growing dividends. Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett has held on to this healthcare conglomerate for the past 14 years, though he dumped a significant amount of its stock in 2012 in disappointment over the many manufacturing and legal issues it faced. The company has failed to impress in 2020; the stock is up just 1.6% year to date (YTD), which is surprising considering that the S&P 500 is up 9.7% in the same time frame.
Investors are concerned that the ongoing surge in COVID-19 cases across the world may continue to drag on the number of medical procedures being performed -- such procedures are a key demand driver for medical devices. They're also worried about low top-line growth, regulatory hurdles, drug-pricing pressures, and ongoing biosimilar competition for the company's blockbuster immunology drug, Remicade (sales of which were $2.8 billion, or 2.8% of the company's total revenue, in the first nine months of 2020). Meanwhile, Johnson & Johnson remains entangled in myriad lawsuits involving its role in opioid abuse, faulty hip implants, and asbestos contamination in baby powder and talc products. These lawsuits, which involve settlements worth billions of dollars, are a major concern.
Source Fool.com
