The healthcare industry is on a roll; with all the acquisition deals, soaring earning figures and launch of new drugs, the third quarter has gone pretty well for almost all the healthcare related companies. Some of the most renowned companies belonging to this sector of the industry, including Johnson & Johnson (NYSE:JNJ) and AbbVie (NYSE:ABBV), are currently trading near their 52 week highs, and by the looks of it, it will not come as a surprise if the prices shoot even higher.
The stocks of Johnson & Johnson (NYSE:JNJ) performed strongly in the past year, but the figures are even going up in this year as well. Market and Industry analysts are of the view that even though the company is currently trading near its 52 week high, it is still beneficial to buy some stocks in this company. With the dividend yield of 2.57 percent and P/E/ of 17.55, the company definitely will not disappoint you.
However, there are a number of reasons why the stock can change its direction. Starting off with the first one, the company relies on two of its drugs for its growth story- Zytiga, a cancer drug and Olysio, a drug for hepatitis C. In the most recent quarter, the company reported a drop of 63 percent in the sales of Olysio. The drug was responsible for only 10 percent of the total sales. Experts are of the view that the company can witness even lower numbers, for Gilead Sciences (NASDAQ:GILD) has gotten FDA approval for its Harvoni pill.
The research partners of Johnson & Johnson (NYSE:JNJ) are trying to make a combo of Savaldi and Olysio in order to beat Harvoni. The company received its regulatory approval in the month of November from FDA. But this does not mean that J&J will not have to struggle; the company does not control its pricing, which means that the combo drug will be sold at much higher price.
Since the sales of Olysio are low, Zytiga really needs to pick up its momentum. The drug has not shown good numbers in the recent quarter; it had the lowest yearly growth rate of all time. The rate was 10 percent lower than previous quarters.
Johnson & Johnson (NYSE:JNJ), like all the other companies belonging to healthcare industry, faces a seasonality problem: the important drugs that the company manufactures ace the sales in the first quarter but report low numbers in the last one. If the trend goes on, chances are that the company will report negative figures for its growth rate in the 4th quarter. The company might be at the verge of ending its year’s long record of reporting growth in consecutive quarters.
As for the stock prices of Johnson & Johnson (NYSE:JNJ), the company, on the last trading day of November 17, 2014, started its stocks at a price of $108.0 and closed at a price of $108.3, after hitting the highest figures of 108.69.