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JNJ or ABT: Who Is on a Better Earnings Growth Trajectory?

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Jan. 23 2019, Updated 7:31 a.m. ET

Earnings guidance

In its third-quarter earnings conference call, Johnson & Johnson (JNJ) has forecasted its fiscal 2018 adjusted EPS to be $8.13–$8.18, which implies a YoY rise of 11.8% at the midpoint. This projection has assumed a positive impact of $0.15 per share attributed to foreign exchange considering rates in October 2018.

According to its third-quarter earnings conference call, Johnson & Johnson has estimated its fiscal 2018 adjusted EPS to fall in the range of $7.98–$8.03 on a constant currency basis, which implies a YoY rise of 9%–10% at the midpoint. In the third quarter, Johnson & Johnson reported adjusted EPS of $2.05, beating consensus estimates by $0.02. In its third-quarter earnings conference call, Abbott Laboratories (ABT) has projected adjusted EPS of $0.80–$0.82 for the fourth quarter of 2018. The company has forecasted a mid-to-high-single-digit organic sales growth for the fourth quarter of 2018. In the third quarter, Abbott Laboratories reported adjusted EPS of $0.75.

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Wall Street estimates

Wall Street analysts have projected Johnson & Johnson’s non-GAAP EPS to be $8.16, $8.61, and $9.11, for fiscal 2018, fiscal 2019, and fiscal 2020, respectively, which implies a YoY change of 11.83%, 5.43%, and 5.81% for fiscal 2018, fiscal 2019, and fiscal 2020, respectively.

On the other hand, Wall Street analysts have projected Abbott Laboratories’ non-GAAP EPS to be $2.88, $3.20, and $3.60, for fiscal 2018, fiscal 2019, and fiscal 2020, respectively, which implies a YoY growth rate of 15.33%, 11.02%, and 12.60% for fiscal 2018, fiscal 2019, and fiscal 2020, respectively.

Compared to Abbott Laboratories, Johnson & Johnson will likely report higher absolute non-GAAP EPS from 2018 to 2020. However, Abbott Laboratories’ EPS growth rate is expected to be significantly higher than Johnson & Johnson from 2018 to 2020.

In the next article, we’ll compare margins of Johnson & Johnson and Abbott Laboratories in greater detail.

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