Health Care Sector Stock
Presentation
BRENT SOLLER
JAMIE SHRAGER
HARISH NAIR
Agenda
Recommendation
Sector Review
Johnson & Johnson (JNJ) Review
Gilead Sciences (GILD) Review
Medtronic (MDT) Review
Conclusion
Recommendation
Recommendation
Increase Heath Care
weight by 1.00%.
As of 10/29/10
Increase GILD by 50 bps
Increase MDT by 50 bps
Maintain JNJ weight
Sector Review
Sector
Performance
Year-to-date health care
sector performance is
the worst in the S&P
500.
Sectors
S&P 500
Consumer Discretionary
Industrials
Information Technology
Materials
Consumer Staples
Telecommunications Services
Energy
Financials
Utilities
Health Care
QTD
7.42%
9.11%
6.42%
12.04%
11.18%
4.24%
2.43%
10.94%
8.41%
1.99%
2.99%
YTD
9.93%
22.32%
18.61%
16.48%
12.51%
9.55%
8.60%
8.18%
8.07%
2.88%
0.58%
Health Care
Sectors
Strengths and
Threats
Strengths
Demographics (Aging)
Increasing Spending (Obesity)
Historically undervalued on a relative
and absolute basis
Threats
Austerity spending cuts abroad
Economic improvement
Unknowns
Health Care Legislation Impact
Recent elections
Industries within the Health Care Sector
Health Care
Pharmaceuticals
& Biotechnology
Pharmaceutical
Biotechnology
Equipment &
Services
Medical
Equipment
Medical
Supplies
Managed Care
Heath Care
Distribution
Health Care
Industry
Valuations
Absolute Ratios divided by Median
2
1.8
1.6
1.4
Every current ratio is
below its historical 10year median.
(A value of 1 indicates that the
current valuation ratio equals
its historical median valuation)
1.2
1
0.8
0.6
0.4
0.2
0
Price/Trailing
Earnings
Price/Forward
Earnings
Price/Book
Price/Sales
Price/Cash Flow
Pharmacuticals
Biotech
Medical Equipment
Supplies
Managed Care
Distribution
Johnson & Johnson Review
Johnson & Johnson Overview
Diversified healthcare company
with 250 operating companies
operating in 59 countries, with
over 115,000 employees
Three major lines of business:
Pharmaceuticals (36%)
Medical Devices & Diagnostics (38%)
Consumer Products (26%)
Well-known products include:
Tylenol
Band-Aids
Neutrogena
Johnson & Johnson’s Baby
Ticker
JNJ
Current Price
$63.62
52 Week Range
$56.86-$66.20
Market Cap
$174.72 billion
Shares Outstanding
2.75 billion
Revenue (ttm)
$61.897 billion
Gross Profit (ttm)
$16.58 billion
Johnson &
Johnson (JNJ)
YTD Returns
10-year: 4.76%
5-year: 3.16%
3-year: 1.08%
1-year:
4.62%
YTD:
1.21%
10-year YTD Performance
Johnson & Johnson Catalysts
Health Care Catalysts
Demographics, increased spending et cetera
Diversification
JNJ has broad product mix across all health care industries
Research & Development
JNJ spends more than $7 billion annually on R&D which
creates a robust pipeline
25% of 2009 sales were from products introduces in the last
five years
Johnson & Johnson Risks
Regulatory
JNJ must attain FDA approval for pharmaceutical and medical
devices
Competitive
Faces generic drug competition and competition from other
pharmaceutical companies
Reimbursement
Some sales depend on governmental reimbursement in U.S.
and overseas
Johnson & Johnson DCF Model
Year
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
Revenue
62,696
65,160
69,185
73,405
77,736
82,012
86,358
90,676
94,938
99,020
102,981
3.9%
6.2%
6.1%
5.9%
5.5%
5.3%
5.0%
4.7%
4.3%
4.0%
16,468
17,323
18,473
18,718
19,823
20,913
22,021
23,122
24,209
25,250
26,260
26.3%
26.6%
26.7%
25.5%
25.5%
25.5%
25.5%
25.5%
25.5%
25.5%
25.5%
(31)
(33)
(35)
(37)
(39)
(41)
(43)
(45)
(47)
(50)
(51)
-0.1%
-0.1%
-0.1%
-0.1%
-0.1%
-0.1%
-0.1%
-0.1%
-0.1%
-0.1%
-0.1%
3,696
3,888
4,146
4,201
4,449
4,694
4,942
5,190
5,433
5,667
5,894
22.4%
22.4%
22.4%
22.4%
22.4%
22.4%
22.4%
22.4%
22.4%
22.4%
22.4%
12,804
13,468
14,362
14,554
15,413
16,260
17,122
17,978
18,823
19,633
20,418
5.2%
6.6%
1.3%
5.9%
5.5%
5.3%
5.0%
4.7%
4.3%
4.0%
2,932
3,113
3,230
% Growth
Operating Income
Operating Margin
Interest and Other
Interest % of Sales
Taxes
Tax Rate
Net Income
% Growth
Add Depreciation/Amort
2,821
% of Sales
Plus/(minus) Changes WC
% of Sales
Subtract Cap Ex
Capex % of sales
Free Cash Flow
4.4%
4.4%
4.4%
4.4%
(1,727)
(1,814)
(1,899)
(1,980)
(2,060)
1.4%
-0.5%
-0.8%
-1.0%
-1.5%
-2.0%
-2.0%
-2.0%
-2.0%
-2.0%
-2.0%
2,194
2,085
2,006
2,129
2,332
2,952
3,368
3,899
4,177
4,357
4,531
3.5%
3.2%
2.9%
2.9%
3.0%
3.6%
3.9%
4.3%
4.4%
4.4%
4.4%
14,327
13,986
14,931
14,921
15,335
15,276
15,827
16,255
16,924
17,652
18,358
-2.4%
6.8%
-0.1%
2.8%
-0.4%
3.6%
2.7%
4.1%
4.3%
4.0%
Terminal Value
347,137
Free Cash Yield
5.29%
Terminal P/E
17.0
59%
100%
8.18%
Current P/E
Projected P/E
13.7
18.6
13.0
17.7
12.2
16.6
Current EV/EBITDA
Projected EV/EBITDA
9.0
12.3
8.6
11.7
8.1
11.0
Upside/(Downside) to DCF
4,531
4.4%
(1,640)
41%
Terminal
EV/EBITDA
2,755
$
4,357
4.4%
(1,166)
98,148
$
4,177
4.4%
(734)
140,075
238,223
Shares Outstanding
3,990
4.4%
(539)
NPV of terminal value
Projected Equity Value
Implied equity value/share
3,800
4.5%
(330)
NPV of Cash Flows
Current Price
3,609
4.5%
896
% Growth
Free Cash Flow Yield
3,420
4.5%
63.57
86.47
Terminal
Discount Rate
=
9.5%
36.0%
Terminal FCF
Growth =
4.0%
11.2
Johnson & Johnson Valuations
High
Low
Median
Current
Target
Multiple
Target
Metric/
Share
Target
Price
P/Forward E
29.3
11.1
17.1
13.3
16.0
4.71
$75.36
P/S
6.1
2.2
3.8
2.8
3.5
22.9
$80.14
P/B
8.8
3.0
5.7
3.3
5.2
19.3
$100.37
P/EBITDA
20.39
6.94
12.39
8.79
12.2
6.02
$73.37
P/CF
27.0
9.0
16.2
11.0
15.0
5.23
$78.49
JNJ Price Target
Upside Potential
$82
30%
Johnson & Johnson Analyst Estimates
Earnings Estimate
Year End 2009 Year End 2010 Year End 2011
High
$4.63/share
Low
Revenue Estimate
$4.80/share
$5.15/share
$4.66/share
$4.84/share
Year End 2009 Year End 2010 Year End 2011
High
$61.9 billion
Low
Recommendation
Strong Buy
5
Buy
11
Hold
9
Underperform
0
Sell
0
$62.4 billion
$66.8 billion
$61.6 billion
$62.7 billion
Gilead Sciences Review
Gilead Sciences Overview
Biopharmaceutical company
that develops and
commercializes innovative
medicines in areas of unmet
need
Primary area of focus includes
HIV/AIDS, liver disease and
cardiovascular/metabolic and
respiratory conditions.
Founded in 1987 in Foster City,
California
Approximately 4,000
employees
Global company; operations
located in 19 countries
Ticker
GILD
Industry
Biotechnology
Current Price
$37.70
52 Week Range
$31.73-$49.50
Market Cap
$30.92 billion
Shares Outstanding
811.87 million
Revenue (ttm)
$7.98 billion
Gross Profit (ttm)
$5.42 billion
Gilead Sciences
(GILD)
YTD Returns
10-year: 23.60%
5-year: 6.86%
3-year: -4.33%
1-year:
-18.73%
YTD:
-12.87%
10-year YTD Performance
Gilead Sciences Catalysts
Product Advancement:
GILD has submitted an application for a fixed-dose
combination of Truvada & Tibotec Pharmaceuticals TMC278
for HIV treatment. This will be only the 2nd product to contain
a complete treatment regimen in a single once-daily tablet.
GILD’s Quad single tablet had a high success rate for Phase II
clinical trial results
$5 Billion Share Repurchase Program
Health Care Reform Plan
May increase number of consumers
Gilead Sciences Risks
Patent expirations
Health Care Reform Plan
10k states there is difficulty in determining demand and
consumer inventory; a change in benefits may add more
difficulty
The unknown affecting share price
Potential tax increases and/or price pressures
Gilead Sciences DCF Model
Year
2010E
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
8,050,733
8,533,777
8,960,466
9,408,489
9,878,914
10,323,465
10,788,021
11,273,482
11,780,788
12,310,924
12,864,915
6.0%
5.0%
5.0%
5.0%
4.5%
4.5%
4.5%
4.5%
4.5%
4.5%
4,302,841
4,629,880
4,763,194
4,986,499
5,235,824
5,368,202
5,609,771
5,749,476
6,008,202
6,155,462
6,432,458
53.4%
54.3%
53.2%
53.0%
53.0%
52.0%
52.0%
51.0%
51.0%
50.0%
50.0%
(18,930)
(8,534)
(8,960)
(9,408)
(9,879)
(10,323)
(10,788)
(11,273)
(11,781)
(12,311)
(12,865)
0.2%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
1,156,656
1,247,763
1,283,643
1,343,815
1,411,005
1,446,627
1,511,725
1,549,315
1,619,034
1,658,651
1,733,290
27%
27%
27%
27%
27%
27%
27%
27%
27%
27%
27%
3,138,737
3,386,557
3,485,120
3,633,276
3,814,940
3,911,251
4,087,257
4,188,888
4,377,387
4,484,500
4,686,303
7.9%
2.9%
4.3%
5.0%
2.5%
4.5%
2.5%
4.5%
2.4%
4.5%
Capex % of sales
179,030
2.2%
(483,691)
-6.0%
281,776
3.5%
213,344
2.5%
(300,936)
-3.5%
298,682
3.5%
224,012
2.5%
(130,140)
-1.5%
313,616
3.5%
Free Cash Flow
2,552,300
3,000,283
17.6%
3,265,376
8.8%
NPV of Cash Flows
21,946,912
43%
NPV of terminal value
Projected Equity Value
28,834,370
50,781,283
57%
100%
Revenue
% Growth
Operating Income
Operating Margin
Interest and Other
Interest % of Sales
Taxes
Tax Rate
Net Income
% Growth
Add Depreciation/Amort
% of Sales
Plus/(minus) Changes WC
% of Sales
Subtract Cap Ex
% Growth
7.9%
Current P/E
Projected P/E
10.3
16.2
9.6
15.0
9.3
14.6
Current EV/EBITDA
Projected EV/EBITDA
6.6
10.7
6.1
9.9
5.9
9.6
Current Price
Implied equity value/share
Upside/(Downside) to DCF
847,228
$
$
37.70
59.94
59%
246,973
258,087
269,701
281,837
306,300
320,084
334,488
2.5%
2.5%
2.5%
2.5%
2.5%
2.6%
2.6%
2.6%
-148,184
-1.5%
326,004
-154,852
-1.5%
320,027
-161,820
-1.5%
323,641
-169,102
-1.5%
326,931
-176,712
-1.5%
329,862
-184,664
-1.5%
332,395
-192,974
-1.5%
334,488
3.4%
3.3%
3.1%
3.0%
2.9%
2.8%
2.7%
2.6%
3,407,473
4.4%
3,587,725
5.3%
3,694,458
3.0%
3,871,497
4.8%
3,974,691
2.7%
4,177,114
5.1%
4,287,525
2.6%
4,493,329
4.8%
Terminal Value
Free Cash Flow Yield
Shares Outstanding
235,212
-141,127
-1.5%
319,889
Terminal Discount
Rate =
10.5%
Terminal Growth
Rate =
4.5%
78,258,812
Free Cash Yield
5.74%
Terminal P/E
16.7
Terminal
EV/EBITDA
11.2
Gilead Sciences Sensitivity Analysis
Discount Rate
8.00%
8.50%
9.00%
9.50%
10.00%
10.50%
11.00%
11.50%
12.00%
2.00%
73.86
67.99
62.97
58.62
54.82
51.46
48.49
45.83
43.44
2.50%
78.27
71.59
65.94
61.10
56.91
53.25
50.02
47.15
44.58
Terminal 3.00%
Growth 3.50%
Rate
84.15
76.36
69.87
64.38
59.67
55.60
52.03
48.89
46.10
92.05
82.70
75.05
68.68
63.3
58.68
54.69
51.19
48.11
4.00%
100.74
89.43
80.39
72.99
66.83
61.61
57.15
53.28
49.89
4.50%
113.27
99.00
87.90
79.03
71.77
65.72
60.61
56.22
52.43
5.00%
129.95
111.28
97.28
86.40
77.69
70.57
64.63
59.61
55.31
5.50%
153.31
127.67
109.35
95.61
84.93
76.38
69.39
63.57
58.64
6.00%
185.22
148.17
123.46
105.82
92.58
82.29
74.05
67.31
61.70
Gilead Sciences Valuations
High
Low
Median
Current
Target
Multiple
Target
Metric/
Share
Target
Price
P/Forward E
94.4
8.9
26.4
10.1
17.7
3.7
$64.78
P/S
33.7
3.8
13.4
4.2
8.6
9.4
$81.10
P/B
23.6
4.2
12.2
4.9
8.2
8.1
$66.26
P/EBITDA
131.1
7.5
22.4
7.5
11.7
5.3
$62.19
P/CF
135.4
8.3
32.8
10.0
20.6
4.0
$81.38
GILD Price Target
Upside Potential
$60
59%
Gilead Sciences Analyst Estimates
Earnings Estimate
High
Year End 2009
$2.82/share
Low
Revenue Estimate
Year End 2009
Low
$7.0 billion
High
Recommendation
Strong Buy
8
Buy
8
Hold
11
Underperform
0
Sell
1
Year End 2010 Year End 2011
$3.81/share
$4.26 /share
$3.38/share
$3.71/share
Year End 2010 Year End 2011
$8.1 billion
$8.8 billion
$7.8 billion
$8.1 billion
Medtronic Review
Medtronic Overview
Medtronic is one of the largest
medical devices company that
develops and commercializes
implantable medical products
including:
Pacemakers, defibrillators, heart
valves, stents, insulin pumps, and
artificial spinal discs
Customers include:
Hospitals, clinics, third party
healthcare providers, distributors
and other institutions
Ticker
GILD
Industry
Medical Equipment
Current Price
$34.70
52 Week Range
$30.80-$46.66
Market Cap
$36.72 billion
Shares Outstanding
1.08 billion
Revenue (ttm)
$15.81 billion
Gross Profit (ttm)
$3.10 billion
Medtronic (MDT)
YTD Returns
10-year: 2.81%
5-year: -7.72%
3-year: -8.52%
1-year:
-10.25%
YTD:
-19.15%
10-year YTD Performance
Medtronic Catalysts
Market leader with > 50% market share in ICD
Leading position in diversified product portfolio
across 7 market segments
Announced acquisition of Ardian for $800 million
Developer of catheter-based therapies to relieve hypertension
Historically low ratio valuations
Dividends announced for Q2 2011
Medtronic Risks
Efforts to reduce costs by insurance companies and
government
MRI-Safe Pacemakers
Waiting for over a year for FDA approval
Product risk
Recalls/lawsuits are omnipresent
Health Reform Law
Approximately $150-200 million in a new medical device
tax
ICD saturation could adversely affect revenues
Medtronic Recent Events
8/24
Quarterly earnings meets wall street expectations but 2011 expectations
slashed due to weaker global demand for medical implants
8/25
Approved cash dividend $0.225 per share of the company’s common
stock payable on October 29, 2010
9/20
Receives FDA Approval of Integrity® Coronary Stent
10/14
Medtronic Settles US Lawsuits on Sprint Fidelis Family of Defibrillation
Leads
10/29
FDA Classifies Previous Field Action of Medtronic Surgical Device as
Class I Recall
11/01
Medtronic Receives FDA Approval of Talent Captivia® System for
Endovascular Treatment of Thoracic Aortic Aneurysms
11/16
Completed acquisition of Osteotech for $123 million, expanding the
range of its biologics product offerings
Medtronic DCF Model
Year
2011E
2012E
2013E
2014E
2015E
2016E
2017E
2018E
2019E
2020E
2021E
15,911.90
16,643.85
17,476.04
18,306.15
19,175.70
20,038.60
20,940.34
21,830.30
22,758.09
23,668.42
24,615.15
4.60%
5.00%
4.75%
4.75%
4.50%
4.50%
4.25%
4.25%
4.00%
4.00%
4,773.57
4,993.15
5,242.81
5,491.85
5,752.71
6,011.58
6,282.10
6,549.09
6,827.43
7,100.52
7,384.55
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
30.00%
159.12
166.44
174.76
183.06
191.76
200.39
209.40
218.30
227.58
236.68
246.15
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
1.00%
Taxes
986.54
1,031.92
1,083.51
1,061.76
1,112.19
1,162.24
1,214.54
1,266.16
1,319.97
1,372.77
1,427.68
Tax Rate
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
20.00%
3,946.15
4,127.67
4,334.06
4,247.03
4,448.76
4,648.96
4,858.16
5,064.63
5,279.88
5,491.07
5,710.72
4.60%
5.00%
(2.01%)
4.75%
4.50%
4.50%
4.25%
4.25%
4.00%
4.00%
95.47
765.62
873.80
915.31
958.78
1,001.93
1,047.02
1,091.52
1,137.90
1,183.42
1,230.76
0.60%
4.60%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
5.00%
418.02
(182.99)
(208.05)
(183.06)
(191.76)
(200.39)
(209.40)
(218.30)
(227.58)
(236.68)
(246.15)
Revenue
% Growth
Operating Income
Operating Margin
Interest Income
Interest % of Sales
Net Income
% Growth
Add Depreciation/Amort
% of Sales
Plus/(minus) Changes WC
% of Sales
Subtract Cap Ex
Capex % of sales
Free Cash Flow
2.63%
(1.10%)
(1.19%)
(1.00%)
(1.00%)
(1.00%)
(1.00%)
(1.00%)
(1.00%)
(1.00%)
(1.00%)
(95.47)
(765.62)
(873.80)
(915.31)
(958.78)
(1,001.93)
(1,047.02)
(1,091.52)
(1,137.90)
(1,183.42)
(1,230.76)
(0.60%)
(4.60%)
(5.00%)
(5.00%)
(5.00%)
(5.00%)
(5.00%)
(5.00%)
(5.00%)
(5.00%)
(5.00%)
4,364.18
3,944.69
4,126.01
4,063.97
4,257.00
4,448.57
4,648.76
4,846.33
5,052.30
5,254.39
5,464.56
(9.61%)
4.60%
(1.50%)
4.75%
4.50%
4.50%
4.25%
4.25%
4.00%
4.00%
Terminal Value
94,719.11
Free Cash Yield
5.77%
Terminal P/E
16.59
Terminal
EV/EBITDA
11.23
% Growth
NPV of Cash Flows
27,522.29
42.98%
NPV of terminal value
Projected Equity Value
36,518.32
64,040.61
57.02%
100.00%
Free Cash Flow Yield
11.34%
Current P/E
Projected P/E
9.75
16.23
9.32
15.51
8.88
14.78
Current EV/EBITDA
Projected EV/EBITDA
8.32
13.57
7.04
11.47
6.63
10.80
Shares Outstanding
Current Price
Implied equity value/share
1,151.72
33.42
55.60
Terminal Discount
Rate =
Terminal Growth
Rate =
10.0%
4.0%
Medtronic Sensitivity Analysis
Discount Rate
8.00%
8.50%
9.00%
9.50%
10.00%
10.50%
11.00%
11.50%
12.00%
2.00%
63.60
58.55
54.23
50.49
47.22
44.34
41.78
39.50
37.44
2.50%
67.20
61.47
56.63
52.49
48.90
45.76
42.99
40.54
38.34
Terminal 3.00%
Growth 3.50%
Rate
71.51
64.92
59.43
54.79
50.81
47.37
44.36
41.70
39.34
76.79
69.06
62.74
57.48
53.02
49.21
45.90
43.01
40.46
4.00%
83.38
74.12
66.71
60.65
55.60
51.33
47.67
44.50
41.72
4.50%
91.86
80.44
71.57
64.47
58.65
53.81
49.71
46.19
43.14
5.00%
103.16
88.58
77.64
69.12
62.31
56.74
52.09
48.15
44.77
5.50%
118.98
99.42
85.44
74.95
66.78
60.25
54.90
50.43
46.65
6.00%
142.72
114.60
95.84
82.44
72.37
64.54
58.27
53.13
48.85
Medtronic Multiples Valuations
High
Low
Median
Current
Target
Multiple
Target
Metric/
Share
Target
Price
P/Forward E
29.4
9.7
19.7
10.5
19.5
2.5
$48.75
P/S
24.4
9.0
17.3
9.8
16.0
3.5
$56.00
P/B
6.7
2.3
4.9
2.5
4.5
12.7
$57.15
P/EBITDA
6.7
2.2
4.4
2.3
4.0
14.3
$57.20
P/CF
22.8
6.6
14.0
6.57
12.0
4.5
$54.00
MDT Price Target
Upside Potential
$55
61%
Medtronic Analyst Estimates
Earnings Estimate
Year End 2009 Year End 2010 Year End 2011
High
$2.92/share
Low
Revenue Estimate
$3.23/share
$3.46/share
$3.19/share
$3.35/share
Year End 2009 Year End 2010 Year End 2011
High
$14.6 billion
Low
Recommendation
Strong Buy
5
Buy
9
Hold
17
Underperform
1
Sell
0
$15.8 billion
$16.3 billion
$15.6 billion
$15.7 billion
Conclusion
Upside Relative to SIM Opportunities
Ticker
TXT
GLW
MDT
GILD
NIHD
AAPL
GD
HPQ
PEG
ORCL
JNJ
CMCSA
INTC
CCL
CVS
T
BBY
LNC
FLS
AA
NOV
TJX
WMT
VZ
GS
CVX
MUR
HCBK
PG
LAZ
XEL
BUCY
FCX
Stock Name
Textron Inc
Corning Inc
Medtronic
Gilead Sciences Inc.
NII Holdings
Apple
General Dynamics Corp.
Hewlett Packard
Public Service Enterprise Group
Oracle Corp.
Johnson & Johnson Co.
Comcast Corp.
Intel Corp.
Carnival Corp
CVS Caremark
AT&T Inc
Best Buy Co.
Lincoln National Corp
Flowserve
Alcoa
National Oilwell Inc.
TJX
Wal-Mart Stores Inc.
Verizon
Goldman Sachs Group Inc.
Chevron
Murphy Oil
Hudson City Bancorp
Procter & Gamble Co.
Lazard
Xcel Energy Inc
Bucyrus International Inc.
Freeport-McMoRan
Sector
Industrials
Info Tech
Health Care
Health Care
Telecom
Info Tech
Industrials
Info Tech
Utilities
Info Tech
Health Care
Cons Discr
Info Tech
Cons Discr
Cons Staples
Telecom
Cons Discr
Financials
Industrials
Materials
Energy
Cons Discr
Cons Staples
Telecom
Financials
Energy
Energy
Financials
Cons Staples
Financials
Utilities
Industrials
Materials
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Current
Price
20.81
17.49
34.12
37.85
38.82
301.21
65.48
41.74
31.40
27.61
63.02
20.23
21.06
41.28
29.64
28.14
42.75
23.58
105.01
13.01
57.51
45.01
54.27
32.13
165.10
82.57
65.41
11.55
63.39
36.42
23.48
89.27
97.05
Date of
Current Price
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
11/16/2010
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Target
Price
40.00
29.00
55.00
60.00
61.00
445.00
88.00
55.00
41.00
36.00
82.00
26.00
27.00
52.00
37.00
35.00
53.00
29.00
125.00
15.00
66.00
51.00
61.00
36.00
184.00
88.00
68.00
12.00
62.00
35.00
22.00
80.00
86.00
Date of
Target Price
11/1/2010
11/1/2010
11/1/2010
11/19/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
11/1/2010
Expected
Return
92.2%
65.8%
61.2%
59.0%
57.1%
47.7%
34.4%
31.8%
30.6%
30.4%
30.1%
28.5%
28.2%
26.0%
24.8%
24.4%
24.0%
23.0%
19.0%
15.3%
14.8%
13.3%
12.4%
12.0%
11.4%
6.6%
4.0%
3.9%
-2.2%
-3.9%
-6.3%
-10.4%
-11.4%
Final Recommendation
Name
Johnson &
Johnson
Ticker
Current Price
Upside
Price
Target
Current Recommended
Weight Weight
JNJ
$63.62
$82
31%
4.62%
4.62%
Gilead
Sciences
GILD
$37.70
$60
59%
3.17%
3.67%
Medtronic
MDT
$34.70
$55
61%
1.05%
1.55%
All three names have “buy” recommendations, but due to the weight of
JNJ we propose only increasing investment in GILD and MDT.
Health Care Stock Presentation
THANK YOU,
ANY QUESTIONS?