The Motley Fool has a disclosure policy.Stockpile is a broker with higher-than-average risk and the TU Overall Score of 4.63 out of 10. The Motley Fool owns shares of Johnson & Johnson and has the following options: short October 2018 $135 calls on Johnson & Johnson. The Motley Fool owns shares of and recommends Gilead Sciences. Keith Speights owns shares of Gilead Sciences. The Must-Read Trump Quote on Social Securityġ0 Reasons Why I'm Selling All of My Apple Stock The $16,728 Social Security Bonus You Cannot Afford to Miss I think that Gilead is a bargain that should pay off over the long run.ģ Stocks That Are Absurdly Cheap Right Nowĥ Warren Buffett Principles to Remember in a Volatile Stock Market The stock currently trades at 11 times expected earnings. There are several great stories for Gilead right now, including stabilization for its HCV franchise, a powerful new HIV drug with Biktarvy, and a promising pipeline. My favorite among these cash-rich drugmakers is Gilead Sciences. Pretty much anytime is a good time to buy J&J, including now. However, J&J is a blue-chip stock that I see as a good addition to investors' portfolios because of its stability and dividend. I'm not overly excited about Johnson & Johnson's growth prospects. For now, my preference is to stay on the sidelines with this stock. I think the company needs to spend some of its cash to buy assets to help offset revenue losses for these drugs. However, Amgen faces increasing headwinds for Enbrel, Neulasta, Aranesp, and Epogen. The biotech has a great new migraine drug, Aimovig, and several other rising stars. Of these three stocks, I'm least bullish on Amgen right now. J&J could benefit from some "new blood" in its development program. The company's late-stage pipeline primarily consists of studies focused on picking up additional indications for already-approved drugs, including Darzalex, Imbruvica, and Tremfya. The healthcare giant also has a long-term debt of $29.4 billion and could use some of its cash to pay it down.Īre more acquisitions ahead for Johnson & Johnson on the pharmacy front? Possibly. J&J will also likely keep buying back shares. You can safely bet that Johnson & Johnson will continue allocating more cash to its dividend program: The company has increased its dividend for 56 consecutive years. The company hasn't been totally quiet on the dealmaking front in 2018, but the transactions have been much smaller and focused on beefing up the medical device segment. J&J was very active in making acquisitions last year, spending $29.6 billion buying Swiss drugmaker Actelion. The company reported cash, cash equivalents, and marketable securities of $18.1 billion as of the end of the second quarter. 1 healthcare company in the world by market cap, but it comes in at No. Bradway also hinted at the possibility of deals, saying that there is "potential for doing some attractive business development." So far this year, though, Amgen hasn't made any acquisitions - probably because of the high valuations in the industry. The company ended the first quarter with $32.2 billion.Īmgen CEO Bob Bradway stated earlier this year that returning capital to shareholders through buybacks and dividends remains a top priority for the company. Amgen reported cash, cash equivalents, and marketable securities totaling nearly $29.4 billion as of the end of June. AmgenĪnother big biotech isn't too far behind Gilead. When asked about business development in the biotech's Q2 earnings conference call, CEO John Milligan said that "you'll see many things coming to fruition in the second half of this year." Even though Milligan is stepping down at the end of the year, he stated that his departure shouldn't slow down efforts to make deals. I think that we'll see some acquisitions activity with Gilead in the near future. However, I expect that Gilead won't use as much cash as it has in the past to repurchase shares. Investors can probably count on Gilead to keep boosting its dividend in the future by around 10% annually, as it has since the company initiated the dividend program in 2015. Gilead should be able to grow its cash stockpile, though, with continued strong cash flow provided by its HIV and hepatitis C virus (HCV) franchises. The biotech dipped into its cash reserves to pay its dividend and buy back shares. However, Gilead used most of that amount on tax-related payments. The company generated $1.6 billion in operating cash flow in the second quarter. That was down from $32.1 billion at the end of the previous quarter. As of June 30, 2018, the big biotech reported cash, cash equivalents, and marketable securities totaling $31.7 billion. Gilead Sciences claims the most cash of any drugmaker. Man in a boat made from money on a sea of cash
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