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Earnings Scorecard: Johnson & Johnson

JNJ

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Following the release of first quarter 2012 results, most of the analysts covering Johnson & Johnson (JNJ - Analyst Report) have raised their earnings estimates for 2012. The revision in estimates mainly reflects the guidance provided by the company.

First Quarter 2012 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.

(Read our detailed earnings report at: Marginal Beat for J&J; Outlook Up).

Agreement of Analysts

Estimates for 2012 indicate a significant positive bias. 14 of the 23 analysts covering the stock have raised their estimates for 2012 following the release of first quarter results with only 1 analyst moving in the opposite direction.

Meanwhile, the estimate revisions for 2013 are more balanced with an equal number (7 each) of analysts revising their estimates in either direction.

Over the last 7 days, there have been no estimate revisions for 2012 and 2013.

The upward revision in estimates reflects Johnson & Johnson’s revised outlook for 2012. Following the release of first quarter results, Johnson & Johnson increased its earnings guidance by a couple of cents to $5.07 - $5.17 per share (old guidance: $5.05 to $5.15 per share). The guidance was increased to reflect the positive impact of current exchange rates.

Magnitude – Consensus Estimate Trend

Although several analysts have raised their estimates for 2012, the Zacks Consensus Estimate has gone up by just a couple of cents to $5.12 per share. Meanwhile, the Zacks Consensus Estimate for 2013 remained unchanged at $3.44 per share.

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 the company 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, strong financial position will continue helping the company 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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