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Johnson & Johnson: Nothing to Fix Here

NEW YORK ( TheStreet) -- "If it ain't broke, don't fix it," goes the old saying. If there is no evidence of a real problem, then why bother with it?

For quite some time now, one of the major arguments against Johnson & Johnson (JNJ - Get Report) has been the company is too dependent on its drugs. Although Johnson & Johnson has several businesses in such areas as oncology, medical devices and nutrition, its pharmaceuticals segment has done all of the heavy lifting. The complaint has been the company is not diversified enough.

Management has listened, but they've done very little to appease the critics. Management understands that even amid all of the noise about Johnson & Johnson's organic growth and the so-called "diminishing productive balance," Johnson & Johnson continues to deliver where it matters the most -- on the bottom line. These arguments aren't new. Nor are they likely to stop.

But with shares soaring 44% over the past two years, Johnson & Johnson remains -- without a doubt -- a top-notch player in Big Pharma. With meaningful improvements being made each quarter in areas like orthopedics and medical devices, I agree with management's position to not try to fix what isn't broken. And if the company's fourth-quarter results serve as indication, myths about Johnson & Johnson being "too big to succeed" will remain myths for the foreseeable future.

Revenue advanced 5% year over year to more than over $18 billion, which was strong enough to beat Street estimates by almost 2%. With recent concerns surrounding organic growth, management was able to put much of that noise to rest by posting an organic growth rate of 6%.

As have been the case over the past several quarters, this dominant performance was due to a heavy dose of drugs, which soared 12% year over year on a reported basis. Although the devices segment continue to post sedated results (down 1%), this was significantly offset by a 22% jump in the company's immunology platform. There's some evidence that the company has begun to encroach on territories currently dominated by Merck (MRK) and Sanofi (SNY).

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