Johnson & Johnson Earnings Preview: First Quarter 2009

Johnson & Johnson [[JNJ]] is scheduled to report first quarter 2009 results before the market opens on Tuesday, April 14. Based on our analysis, we at are expecting JNJ to report better than expected results that exceed Wall Street’s consensus expectations.


Analyst Expectations

We are forecasting revenues of $15.5 billion and EPS of $1.24. This would represent a 5% decline in revenues from last year’s $16.2 billion in the same period. The current analyst consensus calls for revenues of $15.5 billion and $1.22 EPS. On January 20, the company provided full-year guidance of $4.45 – $4.55 EPS.


It’s hard to bet against a company like Johnson & Johnson and their incredible track record of outperforming Wall Street’s expectations. While top-line growth may be sluggish in 2009, the company continues to rake in profits. The company also has a great record of rewarding its investors with 46 consecutive years of dividend increases. The recent drop in the company’s share price has helped to push the dividend yield to 3.5%.


Johnson & Johnson’s impressive track record combined with their strong cash position ($12.8 billion) and their robust product pipeline should position the company for strong returns in the years to come.


Share Performance

Johnson & Johnson’s shares are down 13% since the beginning of the year, compared to only a 10% drop in the Dow Jones index. However, in 2008 the company outperformed the 34% decline in the Dow index by falling only 10%.



Shares are now trading at 11.5x consensus 2009 EPS estimates. This is a well deserved premium to the relative valuations of their peer group. At the current price this stock looks very attractive and could provide great value to long-term investors.


Recommendation: Buy with a $60 price target.


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