What to Expect When Johnson & Johnson Reports Tuesday Morning

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Johnson & Johnson (NYSE: JNJ) is scheduled to release its first-quarter financial results before the markets open on Tuesday. The consensus estimates are $2.04 in earnings per share (EPS) and $19.61 billion in revenue, even though the company posted $2.06 in EPS and $20.01 billion in revenue in the same period of last year.

Earlier this quarter, the company announced that its subsidiary, Ethicon, had entered a definitive agreement to acquire Auris Health, a robotic technology firm, initially focused on lung cancer. Management believes this acquisition will accelerate Johnson & Johnson’s entry into robotics, with potential for growth and expansion into other interventional applications.

Under the terms of the agreement, Ethicon is acquiring Auris for approximately $3.4 billion in cash. Additional contingent payments of up to $2.35 billion, in the aggregate, may be payable upon reaching certain predetermined milestones.

On the downside this quarter, Johnson & Johnson has faced more lawsuits related to its talcum powder. In a recent ruling, a California jury awarded $29 million to a woman who claimed talcum-powder-based Johnson & Johnson products caused her cancer. This ruling is the most recent defeat, out of the pool of more than 13,000 talc-related lawsuits nationwide.

Johnson & Johnson said it would appeal this verdict, citing “serious procedural and evidentiary errors” in the course of the trial. Specifically, the firm said that the lawyers for the woman fundamentally had failed to show its baby powder contains asbestos. The company did not provide further details of the alleged errors during the trial.

Johnson & Johnson stock has underperformed the broad markets, with shares up only 5% year to date. In the past 52 weeks, it is only up 4%.

A few analysts weighed in on Johnson & Johnson ahead of the report:

  • Citigroup has a Neutral rating with a $147 price target.
  • Barclays has an Equal rating with a $135 price target.
  • Wells Fargo has an Outperform rating and a $152 target.
  • Morgan Stanley’s Equal Weight rating comes with a $130 target.

Shares of Johnson & Johnson were last seen at $136.17, in a 52-week range of $118.62 to $148.99. The consensus price target is $145.00.


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