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Understanding Future Estimates for Johnson & Johnson

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Analysts estimates

Johnson & Johnson’s (JNJ) revenues are expected to grow with increased demand for its blockbuster drugs including Remicade, Stelara, Olysio, and Zytiga. The company has surpassed all estimates for EPS (earnings per share) in the past, and analysts estimate that JNJ will generate an EPS of $1.65 on revenues of ~$17.5 billion in 1Q16. This translates into a YoY (year-over-year) growth of ~4.2%.

Furthermore, the company expects its EPS to be $1.66 on revenues of $17.96 billion in 2Q16, $1.63 on revenues of ~$17.6 billion in 3Q16, and $1.57 on revenues of ~$18.5 billion in 4Q16.

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Annual estimates

JNJ’s annual estimated EPS for 2016 is $6.51, and the estimate is $6.90 for 2017. Analysts have estimated that revenues for 2016 will likely improve by 1.9% to ~$71.4 billion. These estimates show an increase in YoY revenues for each quarter from 1Q16 onward, following an increase in contributions from baby care, oral health, over-the-counter products, and women’s health in the Consumer Healthcare segment. Analysts also anticipate increases in vision care, cardiovascular care, and special surgery in the Medical Devices segment, and the company is positive about growth in its immunology, cardiovascular, and metabolics franchises in the Pharmaceuticals segment.

In order to divest risk, you might consider ETFs like the Vanguard Dividend Appreciation ETF (VIG), which has 4.3% of its total assets in Johnson & Johnson, or the iShares US Pharmaceuticals ETF (IHE), which has 11.3% of its total assets in Johnson & Johnson. IHE also has 8.8% of its total assets in Pfizer (PFE), 8.1% in Merck (MRK), and 7.0% in Bristol-Myers Squibb (BMY).

In the next and final part, we’ll analyze JNJ’s valuation.

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