Johnson & Johnson Earnings: Will Tuesday Bring More Good News for J&J?

The health-care giant has produced impressive growth in a tough industry, but can it keep succeeding?

Apr 14, 2014 at 2:30PM

On Tuesday, Johnson & Johnson (NYSE:JNJ) will release its quarterly report, and investors have to be pleased with the health-care conglomerate's ability to keep moving its earnings and revenue in the right direction. Even as drug manufacturers Pfizer (NYSE:PFE) and Merck (NYSE:MRK) face the prospect of falling revenue this year, Johnson & Johnson has been able to use its triple attack of pharmaceuticals, over-the-counter consumer products, and medical devices to find ways to keep growing.

Johnson & Johnson is a ubiquitous company, with products that people around the world know almost from birth. Yet even though products like its baby shampoos and Band-Aid bandages might be the most familiar things J&J offers, the real growth story for Johnson & Johnson lately has come from its pharmaceutical division. Can the health-care giant manage to keep finding new ways to bolster its growth even as many investors start to look more critically at health care-related stocks? Let's take an early look at what's been happening with Johnson & Johnson over the past quarter and what we're likely to see in its report.


Stats on Johnson & Johnson

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$18.00 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Johnson & Johnson earnings give investors another boost?
Analysts have been just a little bit downbeat about Johnson & Johnson earnings in recent months. They've left their first-quarter estimates unchanged, but they've nicked off $0.03 per share -- or about half a percent -- from their full-year 2014 projections. That hasn't held the stock back, though, with shares gaining almost 4% since early January.

Johnson & Johnson's fourth-quarter report showed just how important pharmaceuticals have become to the company's overall success. Making up nearly 40% of sales last year, the pharma segment saw substantial growth both from its key Remicade rheumatoid arthritis drug and newer treatments such as prostate cancer-treating Zytiga and psoriasis fighter Stelara. By contrast, though, medical-device sales struggled, and the consumer-products division also failed to see the level of growth that investors had expected.

One problem Johnson & Johnson has faced is that hospitals and other health-care professionals aren't certain enough about the future prospects for their business to make immense capital investments in J&J medical device products. Once the Affordable Care Act fully plays out and once health-care providers can wrap their heads around future business opportunities in the industry, Johnson & Johnson could see its medical device business start getting traction again.

Yet the collapse of biotech stocks could actually refocus investor attention on Johnson & Johnson. Many players in biotech are highly speculative, living or dying by the clinical trial results that they're able to produce. By contrast, Johnson & Johnson has had great success with its pharma pipeline, while largely avoiding the extent of the patent-cliff issues that drove sales at Pfizer, Merck, and other pharma rivals sharply lower. In the long run, Johnson & Johnson will have its own patent challenges, but for now, the defensive characteristics that Johnson & Johnson stock offers investors looks highly attractive in light of the stock market's volatility so far in 2014.

In the Johnson & Johnson earnings report, watch to see whether the pharma side of the business continues to shine. Although good news from pharmaceuticals is always welcome, Johnson & Johnson will eventually have to start firing on all three cylinders in order to reach its full potential.

Who doesn't love a great dividend stock?
The smartest investors know that dividend stocks simply crush their non-dividend paying counterparts over the long term. That’s beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor’s portfolio. To see our free report on these stocks, just click here now.


Click here to add Johnson & Johnson to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information