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Earnings Beat: Johnson & Johnson Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

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Johnson & Johnson (NYSE:JNJ) just released its second-quarter report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 3.4% to hit US$18b. Johnson & Johnson reported statutory earnings per share (EPS) US$1.36, which was a notable 15% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Johnson & Johnson


Taking into account the latest results, Johnson & Johnson's 19 analysts currently expect revenues in 2020 to be US$80.6b, approximately in line with the last 12 months. Per-share earnings are expected to expand 13% to US$6.51. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$79.6b and earnings per share (EPS) of US$6.42 in 2020. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The analysts reconfirmed their price target of US$162, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Johnson & Johnson at US$182 per share, while the most bearish prices it at US$133. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that Johnson & Johnson's revenue growth will slow down substantially, with revenues next year expected to grow 0.1%, compared to a historical growth rate of 3.9% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.0% per year. Factoring in the forecast slowdown in growth, it seems obvious that Johnson & Johnson is also expected to grow slower than other industry participants.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Johnson & Johnson's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Johnson & Johnson analysts - going out to 2024, and you can see them free on our platform here.

Even so, be aware that Johnson & Johnson is showing 1 warning sign in our investment analysis , you should know about...

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.