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What to Expect from Johnson & Johnson and Gilead Sciences’ EPS

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Johnson & Johnson’s EPS trends

In its first-quarter earnings press release, Johnson & Johnson (JNJ) increased its fiscal 2019 adjusted diluted operational EPS guidance from the previously projected $8.65–$8.80, which implies YoY growth of 5.7%–7.6%, to $8.73–$8.83, which implies a YoY rise of 6.7%–7.9%. The company also increased the lower end and narrowed its fiscal 2019 adjusted diluted EPS guidance from $8.50–$8.65, which implies a YoY rise of 3.9%–5.8% to $8.53–$8.63, implying YoY growth of 4.3%–5.5%. The new adjusted diluted EPS guidance assumes a negative impact associated with foreign exchange fluctuations of $0.20.

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Analysts expect Johnson & Johnson’s non-GAAP EPS to change YoY by 5.18% to $8.60 in fiscal 2019, 6.36% to $9.15 in fiscal 2020, and 7.30% to $9.82 in fiscal 2021. In its first-quarter earnings conference call, Johnson & Johnson increased its fiscal 2019 adjusted other income guidance by $400 million to $2.4 billion to $2.7 billion. A major contributor to the company’s other income has been the successful divestiture of the Advanced Sterilization Products business, effective April 1, 2019, and expected to be recorded in the second quarter.

Gilead Sciences’ EPS trends

In its first-quarter earnings investor presentation, Gilead Sciences (GILD) has guided for a fiscal 2019 non-GAAP gross margin of 85%–87%, a YoY rise of 222 basis points at the midpoint and in line with the consensus estimate of 86.45%.

Gilead Sciences expects fiscal 2019 R&D (research and development) expenses to be $3.60–$3.80 billion, a YoY rise of 5.17% at the midpoint. Analysts, however, have projected the company’s fiscal 2019 R&D expenses to be $3.94 billion, a YoY rise of 12.01%.

Gilead Sciences expects fiscal 2019 SG&A (selling, general, and administrative) expenses to be $3.90 billion–$4.10 billion, a YoY rise of 10.86% at the midpoint. Analysts have projected the company’s fiscal 2019 SG&A expenses to be $4.08 billion, a YoY rise of 13.02% and in line with the consensus estimate of $4.08 billion.

Gilead Sciences expects a fiscal 2019 effective tax rate of 20%21%, in line with the consensus estimate of 20.67%. Analysts have projected the company’s fiscal 2019 non-GAAP EPS to be $6.83, a YoY rise of 2.44%.

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