Following the release of second quarter 2012 results, most of
the analysts covering
Johnson & Johnson
) have cut their earnings estimates for 2012. The revision in
estimates mainly reflects the guidance provided by the company.
Second Quarter 2012 Recap
Johnson & Johnson posted second quarter 2012 earnings
(excluding special items) of $1.30 per share, a penny above the
Zacks Consensus Estimate and 1.6% above the year-ago earnings of
$1.28 per share. Results were impacted by negative currency
Revenues declined 0.7% year-over-year to $16.5 billion, just shy
of the Zacks Consensus Estimate of $16.7 billion. While operational
factors favorably impacted sales by 3.5%, currency fluctuations had
a negative impact of 4.2%. Results included the impact of the
recently completed Synthes acquisition, which contributed 1.2% to
global operational sales growth.
Including one-time items, Johnson & Johnson reported second
quarter earnings of 50 cents per share, 50.0% below the year-ago
earnings of $1.00.
(Read our detailed earnings report at:
Currency Hits J&J; Outlook Down.
Agreement of Analysts
Estimate revisions for 2012 indicate a significant negative
bias. 12 of the 16 analysts covering the stock have cut their
estimates for 2012 following the release of second quarter results
with no analyst moving in the opposite direction.
Meanwhile, the estimate revisions for 2013 also show a similar
trend with 9 of the 19 analysts covering the stock cutting their
Over the last 7 days, there have been no estimate revisions for
2012. However, 1 analyst has cut their 2013 estimate with no
movements in the opposite direction.
The downward revision in estimates reflects Johnson &
Johnson's revised outlook for 2012. Following the release of second
quarter results, Johnson & Johnson cut its earnings guidance
and now expects earnings per share of $5.00 - $5.07 in 2012 (old
guidance: $5.07 - $5.17 per share).
The guidance mainly reflects the negative impact of currency
fluctuation, partially offset by the positive impact of the Synthes
acquisition. The updated guidance was well below the pre-earnings
Zacks Consensus Estimate of $5.14 per share.
Magnitude - Consensus Estimate Trend
With the significant negative bias in estimate revisions,
estimates for both 2012 and 2013 have gone down by several cents.
While 2012 estimates are down by 8 cents, 2013 estimates have been
cut by 4 cents.
The Zacks Consensus Estimate for 2012 and 2013 now stands at
$5.06 and $5.46 per share, respectively.
Neutral on Johnson & Johnson
We currently have a Neutral recommendation on Johnson &
Johnson. The stock carries a Zacks #3 Rank (Hold rating) in the
short run. Even though we expect Johnson & Johnson to continue
facing headwinds in the form of EU and Japan pricing pressure,
negative currency fluctuation and manufacturing issues, we believe
Johnson & Johnson's diversified business model, lack of
cyclicality, 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
JOHNSON & JOHNS (JNJ): Free Stock Analysis
To read this article on Zacks.com click here.