Johnson & Johnson Earns $1.28 Per Share

The stock market looks to open higher this morning. I had mentioned before that a lot of banks and financial institutions had been looking weak recently. Goldman Sachs ($GS) reported earnings this morning of $1.85 per share. Even though that doubled the earnings from last year’s second quarter, it still fell 50 cents per share shy of Wall Street’s forecast. The stock looks to gap down to a new 52-week low.

The good news today for our Buy List is that Johnson & Johnson ($JNJ) reported second-quarter earnings of $1.28 per share. Wall Street’s consensus was for $1.24 per share and I thought it could come in as high as $1.30 per share. Still, this is a very strong report. The company also reiterated its full-year earnings forecast of $4.90 to $5 per share.

Second-quarter earnings of $1.28 a share, excluding a charge for closing J&J’s heart-stent business, beat by 4 cents the average estimate of 17 analysts in a Bloomberg survey. Sales rose 8.3 percent from a year earlier to $16.6 billion, overcoming losses from increased generic-drug competition, the New Brunswick, New Jersey-based company said in a statement.

Chief Executive Officer William Weldon won U.S. approvals for drugs to treat AIDS and prostate cancer during the quarter, after adding psoriasis medication Stelara in 2009. That helped offset declines for artery-clearing stents and dozens of recalled over-the-counter brands, led by Tylenol and Motrin.

It was “a decent quarter for J&J,” said Matt Miksic, a Piper Jaffray & Co. analyst in New York, in an e-mail today. “In pharma, the strength in new products offset greater-than- expected generic pressure” to existing drugs.

The weaker dollar clearly gave a boost to JNJ’s bottom line. For the first half of the year, JNJ has earned $2.63 compared with $2.50 one year ago. Given today’s earnings report, I think the company has a very good chance of beating their full-year earnings forecast. In fact, the company could probably raise both ends of the range by five cents per share. Naturally, you wouldn’t want to do this unless you’re absolutely sure it’s going to happen.

JNJ remains a very good buy. The next thing to watch is how well it responds to the earnings report. The stock has had a lot of trouble staying over $70 per share. But now we know that that’s only 14 times earnings.

Stryker ($SYK) is due to report after the close.

Posted by on July 19th, 2011 at 9:34 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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