Johnson & Johnson (JNJ) is slated to report its second quarter 2011 earnings on July 19, 2011. The current Zacks Consensus Estimate for the second quarter is $1.24 per share, representing a year-over-year decline of 2.48%.
Johnson & Johnson has surpassed earnings estimates in two of the last four quarters and reported in line with the Zacks Consensus Estimate in the other two quarters (with a trailing four-quarter average of 7.48%).
First Quarter Recap
Johnson & Johnson posted first-quarter 2011 earnings (excluding special items) of $1.35 per share, $0.10 above the Zacks Consensus Estimate and 4.7% above the year-ago earnings of $1.29. The company beat expectations despite being hampered by product recalls.
Johnson & Johnson’s revenues for the reported quarter increased 3.5% year-over-year to $16.2 billion. Revenues exceeded the Zacks Consensus Estimate of $15.8 billion. Operational factors and foreign exchange movement favorably impacted sales by 1.8% and 1.7%, respectively. Incremental rebates under the US healthcare reform impacted first quarter revenues by about $60 million. A similar impact was felt due to European austerity measures.
(Read our full coverage of the first quarter 2011 earnings report at J&J Beats, Raises Outlook )
Agreement of Analysts
Estimate revisions for Johnson & Johnson have been scarce over the past month. Over the past 30 days, only 3 of the 17 analysts covering the stock for the second quarter of 2011 have revised their estimates. All 3 analysts have slashed their earnings estimates. 2011 estimates have been revised downward over the last 30 days by only 3 analysts with no upward movements.
We note that estimates were revised upwards by some analysts covering the stock following the improved outlook provided by the company while releasing the first quarter results. As the estimates have already been revised, the stock has not seen significant revisions thereafter.
Magnitude of Estimate Revisions
The earnings estimate for the second quarter of 2011 has remained static over the last 30 days due to the lack of significant estimate revisions by the analysts following the stock. 2011 earnings estimate has also witnessed marginal revision, going down by only $0.01 to $4.95 over the last 30 days.
Neutral on Johnson & Johnson
We currently have a Neutral recommendation on Johnson & Johnson. The stock carries a Zacks #3 Rank (short-term Hold rating). Even though Johnson & Johnson has been facing challenges in the form of over-the-counter (OTC) product recalls, pricing austerity in the European Union and generic competition, we believe that the company’s diversified business model, lack of cyclicality and strong financial position will help it in tough situations.
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