Following the release of third quarter 2012 results, most of
the analysts providing estimates for
Johnson & Johnson
) have raised their earnings estimates for 2012. The revision in
estimates mainly reflects the guidance provided by the
Third Quarter 2012 Recap
Johnson & Johnson's third quarter 2012 results exceeded
expectations with earnings (excluding special items) coming in at
$1.25 per share, 5 cents above the Zacks Consensus Estimate and
0.8% above the year-ago earnings of $1.24 per share.
Despite the negative impact of currency fluctuation, Johnson
& Johnson recorded growth on the back of strong product
Revenues increased 6.5% year-over-year to $17.1 billion,
beating the Zacks Consensus Estimate of $16.9 billion. While
operational factors favorably impacted sales by 10.8%, currency
fluctuations had a negative impact of 4.3%. Results included the
impact of the recently completed Synthes acquisition, which
contributed 5.8% to global operational sales growth.
The Pharmaceutical segment put in a strong performance with
sales increasing 7.0% year-over-year to $6.4 billion (operational
growth of 11.3% and negative currency impact of 4.3%). Recently
launched products like Zytiga, Incivo, Stelara, Xarelto, Simponi
and Invega Sustenna continued to perform well. Johnson &
Johnson also recorded incremental sales due to the amendment of
its distribution agreement with
) for Remicade. Other growth drivers include Prezista as well as
(Read our detailed earnings report at:
J&J Beats on Higher Revenues
Agreement of Analysts
Estimate revisions for 2012 indicate a significant positive
bias. 14 of the 18 analysts providing estimates have raised their
estimates for 2012 following the release of third quarter results
with no analyst moving in the opposite direction.
Meanwhile, the estimate revisions for 2013 also show a similar
trend with 11 of the 21 analysts providing estimates raising
their estimates with just 2 analysts moving in the opposite
Over the last 7 days, there have been no estimate revisions
for 2012 and 2013.
The upward revision in estimates reflects Johnson &
Johnson's strong performance in the third quarter and raised
outlook for 2012. Following the release of third quarter results,
Johnson & Johnson upped its earnings outlook for 2012 to
$5.05 - $5.10 in 2012 (old guidance: $5.00 - $5.07 per
Magnitude - Consensus Estimate Trend
With the significant positive bias in estimate revisions,
estimates for both 2012 and 2013 have gone up by a few cents.
While 2012 estimates are up by 3 cents, 2013 estimates have been
raised 2 cents.
The Zacks Consensus Estimate for 2012 and 2013 now stands at
$5.09 and $5.48 per share, respectively.
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. Even though we expect Johnson & Johnson to
continue facing headwinds in the form of EU and Japan pricing
pressure and manufacturing issues, we believe Johnson &
Johnson's diversified business model, lack of cyclicality, and
strong financial position will continue helping Johnson &
Johnson pave its way through tough situations.
About Earnings Estimate Scorecard
As a PhD from MIT, Len Zacks proved over 30 years ago that
earnings estimate revisions are the most powerful force
impacting stock prices. He turned this ground breaking
discovery into two of the most celebrating stock rating systems
in use today. The Zacks Rank for stock trading in a 1 to 3
month time horizon and the Zacks Recommendation for long-term
investing (6+ months). These "Earnings Estimate Scorecard"
articles help analyze the important aspects of estimate
revisions for each stock after their quarterly earnings
announcements. Learn more about earnings estimates and our
proven stock ratings at http://www.zacks.com/education/
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