Stock comparison – Here we will take a look into both pharmaceuticals Abbvie and JNJ, compare their stocks and look into their future projects and growth.
ABBV and JNJ partner on one of the biggest cancer drugs in the world, Imbruvica.
At the same time, the two pharmaceutical companies compete toe to toe against each other in the immunology market.
For a more detailed comparison, check out my Youtube channel HERE.
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ABBV
In 2013 Abbott separated into two publicly traded companies. The new Abbott Laboratories would specialize in diversified products including medical devices, diagnostic equipment and nutrition products
while AbbVie would operate as a research-based pharmaceutical manufacturer.
In 2019, AbbVie garnered revenue totaling some 33.3 billion U.S. dollars.
AbbVie’s entire product line consists mainly of 16 drugs, among them Lupron (for prostate cancer), Androgel (a testosterone booster) and Creon (pancreas therapy).
But the company’s undisputed heavyweight champion is Humira, an anti-inflammatory medication that just happens to be one of the world’s best-selling drugs.
The #1 selling drug in the world is expected to maintain that top spot through 2023.
One thing that worries the investors is Humira’s patent, which expired in Europe in 2018 and is due to expire in the US by 2023.
Abbvie is trying to protect itself, adding patents which last as long as 2034.
Even after Humira’s patent expires, analysts still expect a revenue of 10 to 15Billion US Dollars annually.
Abbvie is not sitting still though, and in May 2020 they bought Allergan for 62 Billion Dollars, with the main goal to diversify away from Humira.
The purchase of Allergan really broadens its pipeline beyond the world’s top-selling drug.
In 2020, Abbvie is expected to deliver 30B of revenue without counting Humira sales.
This represents a drop in Humira’s influence on the revenue from 60% to 40%.
ABBV Stock
As of 09.11.2020, ABBV is trading at 97.97 USD with a P/E of 20.71 and a Fwd P/E of 9.35.
ABBV also has a Consensus Price Target of $110.29 and the consensus rating has been a buy for the last 180 days.
Looking into it’s dividends:
This year, it raised its quarterly dividend to $1.30 per share.
ABBV is increasing its dividend by an average of 23.36% each year.
The dividend’s yield is outstanding — 4.80% trailing twelve months with a payout ratio of 52.80%.
Johnson & Johnson
Johnson & Johnson is an American multinational corporation founded in 1886 that develops medical devices, pharmaceutical, and consumer packaged goods.
The company has been one of the most respected, well managed, and consistent companies for decades now.
Pharmaceutical sales make up slightly more than half of JNJ’s revenue with its consumer health and medical devices bringing in the rest of its sales.
The strongest growth within the segment was seen within Oncology, which included the drug Darzalex.
Looking out for the future:
By 2021, the company is expected to file 10 new products (each expected to drive $1B+ in revenue) and 50 line extensions (11 with at least $500M potential) in order to combat the company’s expected declines from blockbuster drug Remicade.
JNJ Stock
Trading at 148.28 US dollars as of 09.11.2020, it has a P/E ratio of 23.31 with a Foward P/E of 18.56.
JNJ also has a Consensus Price Target of $166.08
The Dividend King has increased quarterly dividends for 58 years and recently announced it was raising its quarterly dividend 6.3% to $1.01 a share,
a solid yield of 2.73%. The payout ratio is 49.25%, easily sustainable as evidenced by the company’s history.
Conclusion & Comparasion;
AbbVie pays an annual dividend of $4.72 per share and has a dividend yield of 4.8%. Johnson & Johnson pays an annual dividend of $4.04 per share and has a dividend yield of 2.73%.
AbbVie pays out 52.8% of its earnings in the form of a dividend. Johnson & Johnson pays out 46.5% of its earnings in the form of a dividend.
Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
AbbVie is trading at a lower price-to-earnings ratio than JNJ, indicating that it is currently the more affordable of the two stocks, also Abbvie has a higher dividend growth than Johnson and Johnson, with a 23% against a 6%.
I am more inclined towards Abbvie stock. Not only does it present a yield of 4%+, their forward p/e is also lower than JNJs, that been said, I don’t think you can go wrong with either of them, but if i had to choose one I’d go with Abbvie.
Check out some of our other posts:
The future of Technology
How to Pick a Stock
And our Youtube channel here:
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