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Dow-30 Earnings: Johnson & Johnson - First Quarter 2012
Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report), the world's largest healthcare company and a Dow-30 component, has reported its first-quarter results. Sales, at $16.1 billion, marked a nominal decline from the year-earlier total, as operational gains were more than offset by the negative impact of currency fluctuations. Our forecast called for sales of $16.3 billion. Share net advanced 1.5%, year over year, to $1.37, and came in $0.05 ahead of our estimate, as margin expansion mitigated the top-line shortfall. Johnson & Johnson shares were relatively flat in morning trading.
The Consumer business, which encompasses baby care products, as well as oral, wound, and skin care treatments, stumbled in the March period. Worldwide segment sales, at $3.6 billion, slipped 2.4%, year over year, with domestic and international revenues down 2.2% and 2.5%, respectively. The suspension of manufacturing at a Pennsylvania facility was a notable negative, while rising sales of JNJ's NEUTROGENA line of skin care products was a positive contributor.
Meantime, the Pharmaceutical segment was a bright spot, with sales advancing 1.2% from the year-earlier term to $6.1 billion. Booming international revenues (+16.5%) easily offset declining sales at home (-10.8%), owing to strong demand for REMICADE and VELCADE (treatments for inflammatory diseases and multiple myeloma, respectively). Recently launched products also gave results a boost, most notably ZYTIGA (aimed at men with prostate cancer), STELARA (a treatment for plaque psoriasis), and INCIVO (an antiviral inhibitor targeting hepatitis C).
Sales at the Medical Devices and Diagnostics unit fell slightly, to $6.4 billion, though most of the decrease was attributable to negative currency movements. In fact, its Lifescan line of blood glucose monitoring products registered higher sales, as did Biosense Webster (electrophysiology) and Advanced Sterilization (infection prevention).
As to the remainder of 2012, we are maintaining our top- and bottom-line estimates at $67.1 billion and $5.12 a share, respectively. Those figures would mark advances of 3%-4% and 2%-3% from their respective 2011 tallies. Our share-net target is at the midpoint of management's updated full-year guidance. Looking ahead to 2013, our respective sales and earnings forecasts stand at $70.4 billion and $5.45 a share.
In our view, Johnson & Johnson stock remains an excellent buy-and-hold selection for conservative, income-minded investors. Long-term capital appreciation potential is decent, on a risk-adjusted basis (Safety: 1; Beta: .65). Furthermore, the dividend yield on these shares is higher than the Value Line median and well above the issue's historical average.
About The Company: Johnson & Johnson manufactures and sells health care products. Its major lines consist of numerous household products. The company operates in a diverse number of segments, including Consumer (baby care, nonprescription drugs, sanitary protection, and skin care), Medical Device & Diagnostics (wound closures, minimally invasive surgical instruments, diagnostics, orthopedics, and contact lenses), and Pharmaceutical (contraceptives, psychiatric, anti-infective, and dermatological drugs).
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.