We expect Johnson & Johnson (JNJ) to report in line second-quarter 2013 results before the opening bell on Jul 16, 2013.
Factors at Play for 2Q
We expect the Pharma business to continue performing well. Although some products are facing generic competition, new products like Zytiga, Stelara, Xarelto, Simponi and Invega Sustenna should continue to perform well.
Meanwhile, we expect the Medical Devices & Diagnostics segment to continue facing challenges in the form of European austerity measures, pricing pressure and a slowdown in elective surgeries, which have all contributed to more tempered growth rates The Consumer segment should grow in low single digit rates.
The company has been trying to offset the declining sales of some of its important products by bringing in new products through in-licensing deals and acquisitions. We believe the diversity and strength of the company’s underlying businesses will continue to provide strong growth.
Johnson & Johnson has delivered positive earnings surprises in the last four quarters with an average beat of 2.20%.
Earnings Whispers?
Our proven model does not conclusively show that Johnson & Johnson is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive earnings Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, #2 or #3 for this to happen.
Zacks ESP: The ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate currently stand at $1.40.
Zacks Rank #3 (Hold): Johnson & Johnson’s Zacks Rank #3 lowers the predictive power of ESP because the Zacks Rank #3 when combined with an ESP of 0.00% indicates the possibility of in line results.
Stocks to Consider
Here are some other stocks you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this season:
Eli Lilly and Company (LLY) has Earnings ESP of +1.98% and holds a Zacks Rank #3 (Hold). Eli Lilly will be reporting second quarter earnings on Jul 24 before the market opens.
Biogen Idec. (BIIB) has Earnings ESP of +3.89% and holds a Zacks Rank #3 (Hold). Biogen will be reporting second quarter earnings on Jul 25 before the market opens.
Abbott Laboratories (ABT) has Earnings ESP of +2.27% and holds a Zacks Rank #3 (Hold). Abbott will be reporting second quarter earnings on Jul 17 before the market opens.
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