Johnson & Johnson Earnings Preview: Can It Turn The Tide?
By: JOHNSON & JOHNSON (JNJ)
Multinational health-care and pharmaceutical giant. Produces everything from bandages to drugs to medical equipment. Dow component.
Reports Q1 earnings Tuesday 4/15 at about 8a ET. Conference call at 830a ET.
WHAT WILL MOVE THE STOCK:
STRENGTH IN DIVERSITY - Solid growth in medical devices (except for stents - see below) and consumer healthcare (see further below) should offset weakness in pharmaceutical sales.
WEAK DOLLAR - The weakening dollar should help Johnson & Johnson's results.
STENT ISSUES - Concerns about the effectiveness of drug-coated stents have hit the sales of J&J's Cypher stent. Growing competition from other stent makers isn't helping either.
DRUGS - Expectations are low for this part of JNJ's business. What's the outlook for upcoming drugs? How is anemia drug Procrit doing?
GUIDANCE - In last quarter's earnings announcement, JNJ gave guidance that was roughly in line with expectations. The company said full-year 2008 revenues would be between $63.5 billion and $64.2 billion and EPS would be $4.39 to $4.44 a share. Is the company still on track to make those numbers?
INTEGRATION OF PFIZER CONSUMER HEALTHCARE - JNJ should get a boost from Pfizer's consumer healthcare unit which it bought in December, 2006. The move nearly doubled the size of J&J's personal-care products division. The acquisition added brand names like Listerine, Rogaine, Sudafed and Nicorette to a stable that already included household names like Tylenol and Neutrogena.
ESTIMATES:
Q1 Estimates: EPS up 4% to $1.20, revenues up 5% to $15.830 billion
Q2 Estimates: EPS up 8% to $1.14, revenues up 5% to $15.950 billion
FY 08 Estimates: EPS up 7% to $4.44, revenues up 4% to $63.749 billion
Source: Thomson Financial
Year-ago actuals: Q1 EPS $1.16, Rev. $15.037 billion
*All estimates are current as of 4/14 and subject to change.*
FACTOIDS:
DEAD MONEY? NO WAY - JNJ shares are up less than 1% since the company last reported earnings on January 22nd. However, JNJ closed at $68.31 just six days earlier then fell 9% to $62.18 on January 30th. The stock closed at a six-month low of $61.33 on March 10th before rallying nearly 7% to Monday's close of $65.74.
