Robin Hepworth, chief investment officer at Ecclesiastical Investment Management, thinks US pharmaceutical company Johnson & Johnson (JNJ: NYQ) can continue to deliver for long-term shareholders.
"The last few months have seen the third-quarter share price performance of Johnson & Johnson lagging behind the S&P 500 index, although there has been a recent uptick. But we remain positive on both the sector and the company," he says.
"The long term sector drivers include favourable demographics - an ageing population with chronic long-term ailments, as well as growing sales in emerging market - rising gross domestic product correlated with increased healthcare spend.
"At a company level, we are attracted by the robust balance sheet, low leverage, strong free cash flow generation and growing dividends. All of these augur well for the long-term shareholder returns.
"Johnson & Johnson also trades at a discount to its peer group and the S&P 500, whilst offering a 3 per cent dividend yield.
"The future looks rosy for the company with successful recent new product launches such as Xarelto in cardiovascular and Invokana in Type 2 diabetes. We like the pipeline which includes promising candidates such as Ibrutinib in cancer and Simeprevir in Hepatitis C."
Johnson & Johnson is listed on the New York Stock Exchange and trades at around $90 (£56.12) a share. It has delivered 29 consecutive years of adjusted earnings increases and 51 consecutive years of dividend increases.
In its third-quarter results the company reported sales of $17.6bn, an increase of 3.1 per cent as compared with the third quarter of 2012. Excluding special items, net earnings were $3.9bn and diluted earnings per share $1.36, representing increases of 11.3 and 8.8 per cent respectively, as compared to the same period in 2012.
Johnson & Johnson has increased its earnings guidance for full year 2013 to between $5.44 and $5.49 per share.
