Options Trade – Johnson & Johnson (NYSE:JNJ) Calls 
Monday, January 19, 2015

**OPTIONS TRADE: Buy the JNJ Apr 2015 105.000 call (JNJ150417C00105000) at or under $2.40, good for the day. Place a protective stop loss at $0.95 and a pre-determined sell at $4.00.

by Ian Harvey

January 19, 2015


Johnson & Johnson (NYSE: JNJ), a holding company engaged in the research and development, manufacture and sale of a broad range of products in the health care field, reports fourth-quarter results before the market opens on January 20. Analysts expect the company to post earnings of $1.25 per share on revenues of $18.59 billion. During the same period last year the company had earnings of $1.24 per share, and the stock is down 2.2% so far in 2015, which allows for a good movement upwards.

Johnson & Johnson is a solid stock, with a fantastic earnings track record. The company has managed to outpace analyst estimates for nine consecutive quarters, and it is expected that its Q4 report will extend the streak. The company's consumer goods sector should benefit from improved consumer confidence, and its drug and healthcare businesses should benefit from positive trends in the health care sector.

Technical Details

Johnson & Johnson has a 52-week low of $86.09 and a 52-week high of $109.49. The stock has a 50-day moving average of $105.5 and a 200-day moving average of $104.5. The company has a market cap of $291.2 billion and a price-to-earnings ratio of 16.97.

Why Johnson and Johnson?

• J&J is one of only three companies on the planet to have a AAA credit rating -- presenting stability that it represents.

• It is also number one in terms of market capitalization among healthcare companies.

• J&J is targeting three years to achieve operational savings of more than $1 billion.

• In the last year, J&J had six new pharmaceutical products reach $1 billion or more in sales – and two other drugs should attain the billion-dollar sales level soon.

• There has been approximately a 9 percent compound annual growth rate for J&J's sales from 1994 through 2013.

• J&J now has 10 medical device and diagnostics platforms with over $1 billion in annual sales. There are also ten major pharmaceutical regulatory filings that J&J expects between 2013 and 2017.

• There were at least 20 phase 3 clinical studies initiated in 2014 by J&J. The company also anticipates 20 major consumer product launches during 2015.

• The company expects 25 major pharmaceutical line extensions between 2013 and 2017.

• J&J has been on Fortune magazine's Most Admired Companies List for 30 years.

• The healthcare giant also had at least 30 medical device and diagnostics approvals or pending filings as of the third quarter of 2014.

• J&J also expects to have 30 major medical device and diagnostics filings between 2014 and 2016.

• For 30 consecutive years, J&J has increased adjusted earnings.

• J&J has made 34 deals since 2010 to build its strong oncology portfolio, which includes drugs such as Doxil, Imbruvica, and Zytiga.

• There have been at least 50 major new medical device and diagnostics product launches by J&J since 2012.

• J&J has increased dividends for 52 years in a row.

• 55% of J&J's 2013 sales stems from outside the U.S. Over one-fifth of all sales came from emerging markets.

• J&J has been in operation since 1886. And the 128-year-old is still quite spry.

• 180 billion dollars has been invested by JNJ in innovation between 1994 and 2013. Around $100 billion of that total was on internal initiatives, while $80 billion or so went to fund external deals.

Analysts Opinions

Johnson & Johnson has been given an average rating of “Hold” by the nineteen brokerages that are covering the company. One research analyst has rated the stock with a sell rating, eleven have issued a hold rating and seven have given a buy rating to the company. The average 12-month price target among analysts that have issued a report on the stock in the last year is $110.27.

The company has been the subject of a number of research reports:-

• Analysts at Barclays raised their price target on shares of Johnson & Johnson from $102.00 to $103.00 and gave the company an “equal weight” rating in a research note on Friday.

• Analysts at Jefferies Group lowered their price target on shares of Johnson & Johnson from $114.00 to $113.00 and set a “hold” rating on the stock in a research note on Thursday.

• Analysts at Goldman Sachs downgraded shares of Johnson & Johnson from a “neutral” rating to a “sell” rating and set a $97.00 price target on the stock in a research note on Thursday. They noted that the move was a valuation call.

• Finally, analysts at JPMorgan Chase & Co. reiterated a “hold” rating and set a $110.00 price target (up previously from $108.00) on shares of Johnson & Johnson in a research note on Tuesday, December 16th.


Healthcare stocks soared in 2014, and 2015 is shaping up to be another great year for stocks, and Johnson & Johnson is leading the pack.

Therefore, based on the facts above the following options trade is recommended…..

**OPTIONS TRADE: Buy the JNJ Apr 2015 105.000 call (JNJ150417C00105000) at or under $2.40, good for the day. Place a protective stop loss at $0.95 and a pre-determined sell at $4.00.

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