Will JNJ Miss on Earnings? - Analyst Blog
16 April 2013 - 2:30AM
Zacks
Johnson & Johnson (JNJ) is scheduled to
report its first quarter 2013 results on Apr 16, 2013 before the
opening bell.
Last quarter, the company posted a 1.71% positive surprise.
Let’s see how things are shaping up prior to the announcement.
Factors at Play for 1Q
Last quarter, Johnson & Johnson recorded growth on the back
of strong product sales despite the negative impact of currency
fluctuation. Even though we expect the company to continue facing
headwinds in the form of pricing pressure, manufacturing issues and
US healthcare reform, we believe Johnson & Johnson’s
diversified business model, lack of cyclicality, and strong
financial position will continue to help the company pave its way
through difficult situations.
Earnings Whispers?
Our proven model does not conclusively show that Johnson &
Johnson is likely to beat earnings this quarter. That is because a
stock needs to have both a positive earnings Expected Surprise
Prediction (ESP) (Read: Zacks Earnings ESP: A Better Method) and a
Zacks Rank of #1, 2 or 3 for this to happen. That is not the case
here as you will see below.
Negative Zacks ESP: This is because the Most
Accurate estimate stands at $1.39 while the Zacks Consensus
Estimate is higher at $1.41. That is a difference of -1.42%.
Zacks Rank #3 (Hold): Johnson & Johnson’s
Zacks Rank #3 lowers the predictive power of ESP because the Zacks
#3 Rank when combined with a negative ESP makes surprise prediction
difficult. We caution against stocks with Zacks Ranks #4 and #5
(Sell rated stocks) going into the earnings announcement,
especially when the company is seeing negative estimate revision
momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our
model shows they have the right combination of elements to post an
earnings beat this quarter:
Eli Lilly and Company (LLY), Earnings ESP of
6.73% and Zacks Rank #3 (Hold)
Onyx Pharma Inc. (ONXX), Earnings ESP of 3.39%
and Zacks Rank #3 (Hold)
GileadSciences (GILD),
Earnings ESP of 2.08% and Zacks Rank #2 (Buy)
GILEAD SCIENCES (GILD): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis Report
LILLY ELI & CO (LLY): Free Stock Analysis Report
ONYX PHARMA INC (ONXX): Free Stock Analysis Report
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