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JOHNSON & JOHNSON (JNJ)
Dow Component. Some companies focus on drugs, others on medical devices, still others keep it simple making bandages. J&J does it all. Risperdal and Remicade are just two of the drugs from the company's Pharmaceuticals division. The Medical Devices and Diagnostics unit produces everything from surgical equipment to stents to contact lenses. And of course, the Consumer Products division makes shampoo, first aid and a host of other well-known products. Largest player in the health care sector with a market cap of about $170 billion.
Reports Q3 earnings Thursday 10/14 at approx. 800a ET. Conference call at 830a ET.
WHAT WILL MOVE THE STOCK: 
RISPERDAL CHALLENGE - Is generic competition taking a bigger-than-expected bite out of Risperdal sales? Patent protection for this antidepressant drug expired this year, opening up the market to generic competitors.
STENT COMPETITION - Johnson & Johnson's [JNJ
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] Cypher stent is facing stiff competition from Abbott Labs' Xience stent which just received FDA approval in July.
HOW'S THE ECONOMY? - What's the outlook for sales? Does J&J see any weakness in demand for consumer products as talk of an upcoming recession increases? What about medical devices? Are hospitals and health care providers continuing to invest in big-ticket equipment?
ONE-TIME STENT GAIN - This one will probably be treated as a one-time gain, but you never know. It may also be pushed into a future quarter. On September 30, Johnson & Johnson won a $1.2 billion patent infringement suit against Boston Scientific [BSX
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] and Medtronic [MDT
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] related to early stent designs. Boston Scientific has already announced it will take a one-time charge related to the suit.
ESTIMATES:
Q3 EPS up 5% to $1.11, revenues up 5% to $15.693 billion
Q4 EPS up 9% to $0.96, revenues up 3% to $16.472 billion
FY 08 EPS up 9% to $4.51, revenues up 6% to $64.787 billion
Source: Thomson Reuters
*All estimates are current as of 10/13 and subject to change.*
FACTOIDS:
HOW LOW IS LOW - Friday's close of $55.85 and intraday nadir of $52.06 were the lowest since May and April of 2004, respectively.
IT'S GOOD TO BE DIVERSIFIED - Johnson & Johnson shares are "only" down 20% from their record price set last month. Most pure-play pharmaceutical are faring much worse in this bear market.
BUT IS IT CHEAP? - Even with Monday's rally, Johnson & Johnson shares are trading at under 14x its forward price-to-earnings ratio. Competitor Abbott Labs is trading above 16x. However, pure pharma companies like GlaxoSmithKline [GSK
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] sell for about 10x and Pfizer [PFE
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] can be had for 7x.
CRAMER LIKES IT - Jim gave Johnson & Johnson a thumbs-up during Friday's "Lightning Round" on "Fast Money."
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