Morningstar equity analyst Damien Conover is expecting healthier earnings for Johnson & Johnson than most analysts on Wall Street, he told CNBC Monday.
"The most important thing is to take a look at the margins," said Conover. "I think we’re anticipating better earnings than the street consensus, largely driven by a lot of the work that J&J has done to improve its productivity.
So while revenue and sales "should come in relatively in line with expectations," he thinks a lot of the improvements J&J is doing for efficiency "should really help the bottom line."
J&J reports second-quarter earnings early Tuesday.
The medical and consumer products company is getting its three divisions back on track, Conover said, which is why he sees J&J shares moving to $75 over the next two to three years.
But he also expects that recalls of such familiar products as Tylenol, Sudafed and Rolaids over the past 15 months will weigh on total growth, particularly in the consumer division, for the next two to three quarters into 2012.
Conover's recent bullish prognosis on the state of the pharma sector can be viewed here.
CNBC Data Pages:
J&J — Peers and Rivals:
St. Jude Medical
Neither Damien Conover or Morningstar own shares or have a banking relationship with JNJ.