Johnson & Johnson
) is scheduled to report fourth quarter 2013 results before the
opening bell on Jan 21.
Last quarter, Johnson & Johnson had posted an earnings
surprise of +3.82%. We expect the company to beat expectations in
the fourth quarter as well.
Why a Likely Positive Surprise?
Our proven model shows that Johnson & Johnson is likely to
beat earnings because it has the right combination of two key
Positive Zacks ESP:
(Expected Surprise Prediction), which represents the difference
between the Most Accurate estimate and the Zacks Consensus
Estimate, is +0.83%. This is a very meaningful and leading
indicator of a likely positive earnings surprise.
Zacks #3 Rank (Hold):
Note that stocks with Zacks Rank #1, #2 and #3 have a
significantly higher chance of beating earnings estimates. We
caution against stocks with Zacks Ranks #4 and #5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revision momentum.
The combination of Johnson & Johnson's Zacks Rank #3 (Hold)
and an earnings ESP of +0.83% makes us confident of an earnings
beat on Jan 21.
What is Driving the Better-than-Expected
Johnson & Johnson's has delivered positive earnings surprises
in the last four quarters with an average beat of 3.34%.
Although growth in several Medical Devices & Diagnostics
markets may remain slow due to challenges in the form of European
austerity measures, pricing pressure and a slowdown in elective
surgeries, the Pharmaceutical segment should continue recording
strong growth. The restoration of supply of several
over-the-counter (OTC) products should also drive results.
New products like Zytiga, Invokana, Stelara, Xarelto, Simponi and
Invega Sustenna should remain strong contributors. Other growth
drivers include Prezista, Remicade and Velcade.
Other Stocks to Consider
Johnson & Johnson is not the only company looking up this
earnings season. We also see likely earnings beats coming from
these companies in the medical sector:
) has an Earnings ESP of +9.01% and holds a Zacks Rank #3. Biogen
will be reporting fourth quarter earnings on Jan 29.
Bristol-Myers Squibb Co.
) has an Earnings ESP of +2.38% and holds a Zacks Rank #3.
Bristol-Myers will be reporting fourth quarter earnings on Jan
Forest Laboratories, Inc.
) has an Earnings ESP of +33.33% and holds a Zacks Rank #2 (Buy).
Forest Labs will be reporting third quarter fiscal 2014 earnings
on Jan 21.
BIOGEN IDEC INC (BIIB): Free Stock Analysis
BRISTOL-MYERS (BMY): Free Stock Analysis
FOREST LABS A (FRX): Free Stock Analysis
JOHNSON & JOHNS (JNJ): Free Stock Analysis
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