Johnson & Johnson (NYSE: JNJ): Q1 Earnings Preview 2011

Johnson & Johnson (NYSE: JNJ), the world's largest health-products company, is scheduled to release first-quarter earnings before the opening bell on Tuesday, April 19, 2011. Analysts, on average, expect the company to report earnings of $1.26 per share on revenue of $15.83 billion. In the year-ago period, the company reported earnings of $1.29 per share on revenue of $15.63 billion.

Johnson & Johnson engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three business segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics.

In the preceding fourth-quarter, the New Brunswick, New Jersey-based company's net income was $1.94 billion or $0.70 per share, compared with a profit of $2.21 billion or $0.79 per share in the prior-year quarter. On an adjusted basis, the company earned $1.03 per share in the fourth quarter. Revenue slipped 5.5% to $15.64 billion from $16.55 billion. Analysts, on average, expected the company to report earnings of $1.03 per share on revenue of $16.08 billion. 

At its last earnings call in January, the healthcare giant said that it anticipates earnings in a range of $4.80 to $4.90 per share, excluding the impact of special items. 

The healthcare-giant's reputation has been severely tarnished in recent months due to a eries of recalls at its troubled McNeil Consumer Healthcare unit, which has been recalling over-the-counter or OTC, medicines like Benadryl, Zyrtec, Motrin and Tylenol. Johnson & Johnson is also facing legal action related to the product recall.

The company has been also grappling with generic competition that have impacted its revenues. The drug maker has been trying to offset the effects of generics by sprucing up its other products, as well as foraying into vaccines. The company's blockbuster drugs, the antipsychotic drug Risperdal and epilepsy treatment Topamax, are finding it hard to take on competing generic versions. Risperdal lost patent exclusivity in 2008 and Topamax lost U.S. patent exclusivity in March 2009. JNJ's Concerta attention-deficit drug and Levaquin antibiotic also are expected to face generic competition in the U.S this year. Together, they represent approximately $2.7 billion in sales. 

In the short term, Johnson & Johnson will need to overcome challenges like the product recalls, pricing austerity in the European Union and patent expiries. However, the long term outlook remains strong. The pharmaceutical group has a robust late-stage product pipeline. New medical devices, including ceramic orthopedics and minimally invasive surgical tools have been created. Demographic trends like the aging of the population in the developed countries and health care market growth in developing countries will support further sales growth. Johnson and Johnson’s diversified business model, lack of cyclicality and strong financial position will help it in tough situations. Moreover, Johnson & Johnson has been entering deals, which should help boost its revenues in the long-term.

The company's stock currently trades at a forward P/E (fye Jan 2, 2013) of 11.85 and PEG ratio (5 yr expected) of 2.23. In terms of stock performance, JNJ shares have lost nearly 8 percent over the past year.

Full Disclosure: None.

Johnson & Johnson (NYSE: JNJ): Q4 Earnings Preview 2010

Johnson & Johnson (NYSE: JNJ), the world's largest health-products company, is scheduled to release fourth-quarter earnings before the market open on Tuesday, January 25, 2011. Analysts, on average, expect the company to report earnings of $1.03 per share on revenue of $16.08 billion. In the year-ago period, the company reported earnings of $1.02 per share on revenue of $16.55 billion.

Johnson & Johnson engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three business segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics.

In the preceding third-quarter, the New Brunswick, New Jersey-based company's net income was $3.42 billion, or $1.23 a share, compared to $3.35 billion, $1.20 a share, in the same quarter last year. Revenue slipped 0.7% to $14.98 billion from $15.08 billion. Analysts, on average, expected the company to report earnings of $1.15 per share on revenue of $15.18 billion. 

At its last earnings call in November, the healthcare giant boosted its earnings outlook for full-year 2010 to $4.70 to $4.80 per share, reflecting recent currency exchange rates. The company's guidance excludes the impact of special items. Previously, the company full-year 2010 earnings to be in the range of $4.65 to $4.75 per share, which excludes the impact of special items. 

The healthcare-giant's reputation has been severely tarnished in recent months due to a string of product recalls. In November, the company issued a mrecall of its children's-strength Benadryl and Motrin products because of manufacturing problems. In December, the comany said that it was recalling some of its Rolaids antacid products because of possible metal and wood particle contamination.  The company will not be in a position to resume normal supply of all the recalled products before the first quarter of 2011. Meanwhile, the Fort Washington plant, which has been shut down, is not expected to be operational until late 2011. Johnson & Johnson is also facing legal action related to the product recall.

During the quarter in review, the U.S. Food and Drug Administration put clinical testing of Johnson & Johnson's new pain medication fulranumab on hold due to safety concerns, the company said Tuesday. 

In the short term, Johnson & Johnson will need to overcome challenges like the product recalls and patent expires. The long term outlook remains strong. The pharmaceutical group has a robust late-stage product pipeline. New medical devices, including ceramic orthopedics and minimally invasive surgical tools have been created. Demographic trends like the aging of the population in the developed countries and health care market growth in developing countries will support further sales growth. Johnson and Johnson’s diversified business model, lack of cyclicality and strong financial position will help it in tough situations. Moreover, Johnson & Johnson has been entering deals, which should help boost its revenues in the long-term.

In terms of stock performance, JNJ shares have lost nearly 4 percent over the past year.

Full Disclosure: None.

Johnson & Johnson (NYSE: JNJ): Q4 Earnings Preview 2009

Johnson & Johnson (NYSE: JNJ), the world's largest health-products company, is scheduled to release its fourth quarter 2009 earnings before the opening bell on Tuesday, January 26, 2010. Analysts, on average, expect the company to report earnings of 97 cents per share on revenue of $15.70 billion. In the year ago period, the company reported earnings of 94 cents per share on revenue of $15.18 billion.

Johnson & Johnson engages in the research and development, manufacture, and sale of various products in the health care field worldwide. Its Consumer segment provides products used in baby care, skin care, oral care, wound care, and women's health care fields, as well as nutritional and over-the-counter pharmaceutical products under No More Tears baby shampoo, Band-Aids, Clean&Clear skin care line, Visine, Tylenol, Listerine and more. J&J operates through three segments: consumer, pharmaceuticals, and medical devices and diagnostics, with subsidiaries in 57 countries.

The New Brunswick, New Jersey-based company's third-quarter net income was $3.35 billion, up 1.1% from $3.31 billion earned a year earlier. Moreover, per share earnings improved 2.6% to $1.20 from $1.17 in the same quarter of last year.Quarterly sales to customers totaled $15.1 billion, a decline of 5.3%, compared to $15.9 billion in the previous year,as weak sales of its prescription drugs Topamax and Risperdal were negatively impacted by generic competition. Analysts, on average, expected the company to post earnings of $1.13 per share on revenue of $15.22 billion.

In November, the diversified healthcare giant announced global restructuring initiatives, including elimination of 6% - 7% of its global workforce, to solidify its position as the world's leading global health care company. The company said that the restructuring initiatives aims at a $1.4 billion to $1.7 billion cost savings when fully implemented in 2011, with $800 million to $900 million expected to be achieved in 2010. Additionally, Johnson & Johnson expects to record an associated pre-tax, restructuring charge in the range of $1.1 billion - $1.3 billion in the fourth quarter of 2009, treated as a special item.

In November, the company also reaffirmed its fiscal 2009 earnings guidance of $4.54 to $4.59 per share, excluding the impact of special items such as restructuring charges.

For J&J, fourth quarter was a busy one on the front of acquisitions. The company made two acquisitions in the quarter: Acclarent, which makes devices for minimally invasive treatment of ear, nose and throat disorders, for $785 million; and Gloster Europe, a privately held developer of health care-acquired infections meds.

During the quarter, the FDA approved Stelara for psoriasis, and European authorities approved Simponi for arthritis. Several devices were also cleared by regulatory authorities.

However, the Food and Drug Administration for a second time rejected J&J's experimental antibiotic ceftobiprole, for complicated skin infections like MRSA, in December, saying it will require additional studies.

In November and again in December, J&J recalled lots of its widely-used pain reliever Tylenol over similar complaints. At the time of the December recall, the Food and Drug Administration said that it believed the breakdown of a certain chemical applied to the wooden pallets used to ship the product was the culprit. In January the company expanded the recall of lots of its pain reliever Tylenol to include such other popular over-the-counter brands as Benadryl, Motrin, and Rolaids.

Recently, the Department of Justice filed a complaint against J&J alleging that the company paid millions of dollars in kickbacks to Omnicare. The complaint asserts that the company paid the pharmacy group, which supplies drugs to nursing homes, to purchase and recommend J&J drugs.

Meanwhile, J&J is also engaged in a legal battle with rival Merck & Co. over rights to foreign sales of blockbuster biotech drug Remicade, for rheumatoid arthritis and other immune disorders, and successor drug Simponi.The dispute began when Merck acquired Schering-Plough Corp., with whom J&J jointly sold the drugs. Last week, a federal judge in Delaware declared invalid a quartet of Johnson & Johnson's Cordis Corp. subsidiary's patents for its drug-coated stents Cypher. The patents in question are at the heart of complicated legal wrangling involving Boston Scientific Corp., Johnson & Johnson, Abbott and Wyeth.

Analysts and industry experts believe that the healthcare giant will report higher earnings in the fourth quarter, thanks to the newer mix of products and economic rebound. However, few analysts are expecting another drop in quarterly sales.

The company's stock currently trades at a forward P/E (fye 28-Dec-10) of 12.80 and PEG (5 yr expected) of 1.83. In terms of stock performance, J&J shares have gained nearly 12% over the past year.

Full Disclosure: None.