Comm 300 - Johnson & Johnson Case Study

5. Strengths

Johnson & Johnson's third quarter of its financial year 2016 gross profit margin are fixed when contrasted with a similar period a year before. The organization had increased the net income in the third quarter; however, it still can’t catch up the average growth of other competitors. The Quick Ratio is 2.26 currently, which means that it has a high ability to satisfy any short-term money demand (The Street Ratings, 2016).

Johnson & Johnson is always in the profit earning the position.  It is monetarily stable with Current Assets covering Total Liabilities. From its 2006-2015 Balance Sheet, we have known that Johnson & Johnson’s Total Liability to Total Asset stays around 0.5 over the past ten years. It's in a genuinely fluid position and reliant on the sum and salability of any stock; it might have the financial security to surviving an economic downturn (vuru, 2016).

Johnson & Johnson has reliably held benefits, which may place it in a stable position to contribute to the future, by purchasing new apparatus, putting resources into R&D or various choices. From its 2006-2015 consistent reinvestment of profits, Johnson & Johnson has a persistent growth, which means it has rising earnings over these ten years. By adequately utilizing this income, it can enormously enhance their long haul financial picture (vuru, 2016).

In the meantime, stockholders' equity has remained fixed just growing by 1.69% from the same quarter a year ago. In general, the key liquidity estimations show that the organization is unlikely to have any financial troubles in the future (The Street Ratings, 2016).

6. Risks and challenges

As JNJ's drug patents lapse and competitors create different options, Johnson and Johnson as of now has the biggest pipeline of new drugs as it arrangements for ten new filings by 2019. A potential hazard to JNJ's stock cost is dissent in FDA endorsement with these filings, which would bring about the organization to exclusively depend on its current product offering, and it would unavoidably gradually lose market share without any innovations (Mathews, 2016).

Besides, we have found that Johnson & Johnson’s PEG, which is the price/earning to growth ratio higher that its competitor. Its PEG is 3.02, which is much higher than the standard 1.0 benchmark, which recommends JNJ is charging at a high premium and it isn’t predicted any growths in the future. Johnson & Johnson’s competitors have an average PEG of 2.83, which better approves that JNJ might be overpriced for the investors (Mathews, 2016).

7. Most recent news

Johnson & Johnson was exposed that its powder-based products would cause ovarian cancer earlier on May this year. After a $67.5 million jury decision against Johnson and Johnson on Oct. 27 denoted its third straight trial crush in an invasion of claims asserting its powder based items cause ovarian cancer, the organization is planning to alter the course by having the cases heard in the other court (Yahoo Finance Canada, 2016).

8. Quality of management team

Alex Gorsky, Chairman and Chief Executive Officer of Johnson and Johnson - Started his Johnson and Johnson position as a business agent with Janssen Pharmaceutica in 1988. Throughout the following 15 years, he has made progress through marketing, sales, and management. In 2001, Alex was selected as President of Janssen, and in 2003, he was named Company Group Chairman of Johnson and Johnson's pharmaceuticals business in Europe, the Middle East, and Africa. Alex got to be Chief Executive Officer on April 26, 2012, and Chairman of the Board on December 28, 2013 (Johnson & Johnson, 2016).

...