Johnson & Johnson
) is slated to report its second quarter 2012 earnings on July 17,
2012 before the opening bell. The current Zacks Consensus Estimate
for the second quarter is $1.29 per share, representing
year-over-year growth of 0.8%. Full year earnings are expected to
be $5.14 per share, up 2.8%.
Johnson & Johnson has surpassed earnings estimates in each
of the last four quarters with a trailing four-quarter average of
First Quarter Recap
Johnson & Johnson posted first quarter 2012 earnings
(excluding special items) of $1.37 per share, a penny above the
Zacks Consensus Estimate and 1.5% above the year-ago earnings of
$1.35 per share.
Revenues, however, declined 0.2% year-over-year to $16.1
billion. Revenues were just shy of the Zacks Consensus Estimate of
$16.3 billion. While operational factors favorably impacted sales
by 1%, currency fluctuations had a negative impact of 1.2%.
Including one-time items, Johnson & Johnson reported first
quarter earnings of $1.41 per share, 12.8% above the year-ago
earnings of $1.25.
(Read our full coverage of the first quarter 2012 earnings
Marginal Beat for J&J; Outlook Up
Agreement of Analysts
There is a significant positive bias in estimate revisions for
Johnson & Johnson for the second quarter as well as full year
2012. Second quarter estimates have been revised upward over the
last 7 and 30 days by 2 and 4 analysts, respectively. While 2
analysts have raised their estimates over the last 30 days, there
are no downward movements over the last 7 days.
Full year 2012 estimates too have a positive bias, with 8 of the
15 analysts following the stock raising their estimates over the
past 30 days with just one downward movement during this time
period. Meanwhile, one analyst has raised their estimate over the
past 7 days with no downward movement being witnessed.
The upward revisions mainly reflect the accretive impact of the
Magnitude of Estimate Revisions
While the Zacks Consensus Estimate for the second quarter
remains unchanged at $1.29 per share, the full year 2012 Zacks
Consensus Estimate has gone up by 3 cents over the last 30 days to
$5.14 per share.
At the time of announcing the completion of its Synthes
acquisition, Johnson & Johnson said that its wholly owned Irish
subsidiary, Janssen Pharmaceutical, has signed a $12.9 billion
accelerated share repurchase (ASR) programs with two investment
With the company announcing the share buyback program and the
financial structure for the deal, Johnson & Johnson said that
it now expects the Synthes acquisition to be accretive to earnings
instead of dilutive as expected earlier.
With the financial structure in place, the company now expects
the acquisition to boost 2012 adjusted earnings by 3-5 cents per
share. Meanwhile, 2013 earnings are expected to be boosted by 10-15
cents per share due to the acquisition.
Neutral on Johnson & Johnson
We currently have a Neutral recommendation on Johnson &
Johnson. The stock carries a Zacks #2 Rank (Buy rating) in the
short run. Estimates have been on the rise ever since the company
announced that it expects the Synthes deal to be accretive to
earnings. We expect the company to increase its guidance while
announcing its second quarter results. Our long-term Neutral
recommendation on the stock is based on the belief that Johnson and
Johnson's diversified business model, lack of cyclicality and
strong financial position will help it in tough situations.
Moreover, Johnson & Johnson has been signing deals, which
should help boost its revenues in the long term.
JOHNSON & JOHNS (JNJ): Free Stock Analysis
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