Greg
Public Equities Commentary
Johnson & Johnson's valuation does not make sense at a premium to Thermo Fisher and roughly flat to Danaher. @PythiaR, replying, calls J&J a clean story with limited patent-loss risk until the 2030s and a strong pipeline, but expensive at 22x, and prefers medtech such as Stryker. Pharma may simply have been easier to own than medtech given OBBB payer eligibility changes and hospital procedure volume risk, while life sciences has disappointed. x.comÂ
Thermo Fisher is too expensive to own at 26x next-twelve-month EPS with earnings growing only 10%. That is a 2.6x PEG ratio, not as stretched as FICO or Intuitive Surgical at their highs, but still no chance worth owning. @mathlonning, in the thread being answered, calls the valuation unsustainable. x.comÂ
Johnson & Johnson looks expensive at 22x for its growth, even though its story is clean. Limited loss-of-exclusivity risk until the 2030s, a cleanup via spin-off and divestments, and a pipeline in IBS and cancer could deliver double-digit EPS growth before 2030, and Street estimates are probably too low. Still, Stryker at about 20x 2027 earnings, with high-single-digit organic growth and strong M&A skills, beats JNJ at 21x, which tends to overpay for growth like typical large pharma. x.comÂ
Johnson & Johnson is not the S&P 500 laggard its five-year sideways chart suggests once dividends and longer timelines are counted: over 20 years it trails the index by only the tiniest amount. That says something for a very low-beta stock with one of only two AAA credit ratings, alongside Microsoft. It is a strong anchor for when momentum and growth stocks get clobbered. x.com x.com x.comÂ
Danaher is a cleaner way than Thermo Fisher to play an aging population. Its greater bioprocessing exposure ties it more directly to drug cost of goods. x.comÂ
High-quality healthcare companies such as Thermo Fisher, Boston Scientific, Novo Nordisk and Abbott now trade at washed-out multiples, which may make the space one of the cheapest pockets of the market on a quality-adjusted basis while SaaS draws the attention. x.comÂ
Microsoft's balance sheet is stronger than many people think lately, as it is one of only two corporate AAA ratings left. The other belongs to Johnson & Johnson, and both are worth owning. x.comÂ
Non-AI equities such as Johnson & Johnson could be hurt if more than $10T of AI capex by decade's end triggers a sovereign debt crisis, with hyperscaler borrowing pushing up interest rates, bankrupting countries with little AI exposure and crashing non-AI stocks. AI capex is a bit over $1 trillion this year and should top $2 trillion by 2028, with OpenAI and Anthropic taking a growing share as they monetize compute better and outbid everyone else. dwarkesh.comÂ
Danaher's rebound looks like one to fade near $190 because bioprocessing, its bigger business, delivered disappointing sales and guidance. Weak trading in peers, with Repligen also lower, echoed that. A move from $165 to $190 in two days seems off; the initial flush may have been overdone, but it is hard to argue Danaher deserves to trade back at $200, where it entered earnings, after that bioprocessing commentary. x.comÂ
Altria, Johnson & Johnson, Waste Management, TJX, Linde, Costco and Quest Diagnostics add defense to a portfolio, scoring highest among S&P 500 stocks on an antifragility screen of low volatility, strong free cash flow, minimal debt and stable earnings. All are also trending up this year, with momentum scores above 75; Altria scores 100 on antifragility and J&J 99. x.comÂ
Q1 medical device fears are overblown, a positive for small- and mid-cap device makers such as AngioDynamics. Johnson & Johnson's medical device trends look like normal seasonality. Boston Scientific, by contrast, now looks like a poor company. x.comÂ
