JNJ Quarterly Earnings

The Sources

Interesting Points

  • A $0.08 cent swing to earnings estimates from July based on currency valuations, especially Euro:  “If currency exchange rates for all of 2017 were to remain where they were as of last week that our reported adjusted EPS would be favorably impacted by $0.03 due to currency movements and this is an improvement from the negative impact of $0.05 in our previous guidance.”
  • The reported confidence in 2017 EOY is compelling, but assumes currency up-side:  “Therefore, we would be comfortable with our reported adjusted EPS ranging from $7.25 to $7.30 per share, an increase of $0.10 from our prior guidance and a growth rate of between 7.7% and 8.4%. So in closing, we are extremely pleased with the sales and earnings performance in the third quarter and our higher EPS guidance for 2017. In summary, we are maintaining our operational sales growth of 5.5% to 6% for the year, consistent with our goal of growing earnings faster than sales, our guidance for operational adjusted EPS growth remains strong in the range of 7% to 8% and our businesses continue to invest for the long-term while also delivering on near term priorities.”
  • Pharm area growing as anticipated:  “I think when we met in May 2017 on the occasion of the Pharmaceutical R&D review day, we anticipated that the performance of the Pharmaceutical group was going to accelerate during the second half of the year. And that’s precisely what you are seeing today.You are seeing the pharmaceutical group moving from low single-digit growth in the first half of the year to 6.7% in this third quarter. So clear acceleration of the sales of the pharmaceutical group.”

My Thoughts

  • Things are going as expected … currency values are helping bottom line
  • Does valuation, risk / reward change to drive either a) adding more shares or b) reducing?
    • 10yr FAST Graphs do not show that further investments at this time would make sense
    • With that said, however, i am not reducing shares either and will continue to DRIP shares as dividends arrive.

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