Johnson & Johnson JNJ, will be reporting its fourth-quarter earnings on Tuesday. Wall Street is expecting the company to report $2.28 in EPS and $20.99 billion in revenue, as it reports before market hours.
With a market cap of over $389 billion, Johnson & Johnson is one of the world’s most valuable companies. It is one of only two U.S.-based companies that has a prime credit rating of AAA. The other is Microsoft MSFT. The company is exclusively focused on developing and producing pharmaceutical prescription drugs and medical device technologies. As a 130-year-old surgical dressing and baby products company, its most popular products include Band-Aids, Tylenol and Johnson’s Baby Powder.
Here's what analysts will be focusing on, and how the stock currently maps against Wall Street estimates.
Johnson & Johnson Investment Thesis
Johnson & Johnson stands as a historically reliable investment option. Its commitment to shareholder value through dividends and rock-solid balance sheet make it a staple in diverse portfolios.
In 2023, the company split-off of its Consumer Health segment, resulting in the creation of Kenvue Inc KVUE stock. The $700 million settlement for ongoing litigation about its talc-based baby powders, has impacted the company’s financials and consumer confidence. However, this settlement is viewed as a strategic move to proactively manage future costs and minimize long-term damage.
Johnson & Johnson’s strength lies in its well-diversified Innovative Medicine and MedTech segments. Innovative Medicine focuses on immunology (Stelara and Tremfya) and oncology drugs (Darzalex), while MedTech specializes in surgical devices and orthopaedics.
The acquisition of Abiomed, Inc. for $16.6 billion at the end of 2022 enhanced the company’s position in coronary artery disease and heart failure treatment. Johnson & Johnson has also announced its $2 billion acquisition of Ambrx Biopharma Inc AMAM. This acquisition represents its expansion into targeted cancer therapies.
The company has been paying and growing dividends for 61 years. Despite the Kenvue split-off and ongoing talc litigation, the safety of JNJ’s dividend appears to remain intact.
Related: J&J’s Tentative $700M Agreement To Resolve Talc Powder-Related Lawsuits Across US States
Q4 Analyst Focus & Consensus Ratings
Q4 Analysts' Focus: Analysts will be assessing Johnson & Johnson’s dividend safety pursuant to the Kenvue split-off. The impact of talc lawsuit settlement and the acquisition of Ambrx Biopharma, would also be in focus.
Ratings & Consensus Estimates: The consensus analyst rating on Johnson & Johnson stock currently stands at Neutral, and the consensus price target is $175.75 a share.
JNJ Price Action: On Friday, shares of Johnson & Johnson ended the trading day 0.29% higher, closing at $161.68.
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