Argus Boosts Price Target On Johnson & Johnson Following Strong Quarter

Johnson & Johnson JNJ reported strong 2Q16 results on July 19, while issuing upbeat guidance for the remainder of the year.

Argus’ David Toung maintains a Buy rating on the company, while raising the price target from $130 to $145.

Robust Results

“The strong second-quarter performance was driven by higher sales in the Pharmaceutical and Consumer segments and margin expansion,” Toung mentioned.

The company reported its adjusted EPS for the quarter at $1.74, beating the consensus expectation by $0.06.

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Worldwide sales across all three segments — pharmaceutical, consumer and medical devices — exceeded consensus forecasts, with sales growing 3.9 percent on a reported basis to $18.5 billion.

In addition, margins expanded, with gross margin rising 71.1 percent from the year-ago period, driven by a favorable product mix and improved manufacturing efficiencies, partially offset by FX headwinds.

According to Argus, “During the quarter, the company obtained regulatory approval for Invokamet for the first-line treatment of adult type 2 diabetes. The European Commission conditionally approved Darzalex for the treatment of adults with relapsed and refractory multiple myeloma.”

Guidance Raised

Management raised the full-year guidance, with full-year sales growth guided to 6 percent, excluding the impact of acquisitions, divestitures and hep C product sales.

The operational EPS guidance was also raised from $6.56–$6.71 to $6.66–$6.76

The adjusted EPS estimates for 2016 and 2017 have been raised to reflect the robust 2Q results and upbeat guidance.

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