Analyst Kurt Kruger says he views J&J as a net acquiror; therefore, with Pfizer lower on a near term dilutive acquisition announcement, he thinks a large factor in Monday's stock price weakness is the pending consolidation in the pharma sector.
If J&J were to make an acquisition, Kruger says he thinks J&J would target the cardiovascular area, which would build a franchise for its coated stent products. He says Amgen's attack on the safety of J&J's anemia drug Eprex, which is linked to blood disorder, is not new news. Kruger looks for solid $0.58 second quarter earnings per share on Tuesday; and strong sales in the cardio and ortho markets. Shares are trading at a historically low 17 times the $2.69 2003 EPS.