Johnson & Johnson Beats Earnings & Raises Forecast – So Why is the Stock Falling?

Yesterday, we highlighted Pfizer’s challenges in pivoting as a post-pandemic company. Today, its competitor Johnson & Johnson (JNJ) reported earnings itself. 

But, Johnson & Johnson painted an entirely different picture – beating out the earnings estimate on the top and bottom line while raising the forecast for the remainder of the year.

The company delivered 3rd quarter revenue of $21.4 billion, which was a 6.8% improvement year over year. It also narrowly beat the consensus estimate of $21.04 billion. 

Meanwhile, adjusted EPS of $2.66/share outperformed the $2.51 analysts were forecasting. This too was an improvement year over year, representing a 19.3% gain from this time last year.

CEO Joaquin Duato was satisfied with the results, saying the company made substantial improvements to its pipeline and set the stage for sustainable future growth. 

As COVID-19 products dwindle, the company is narrowing its focus to Innovative Medicine and MedTech solutions. This will involve innovation across the healthcare spectrum, as the company expects to lead the charge and be at the forefront of medical breakthroughs.

In saying that, Johnson & Johnson is optimistic about the remainder of the year. Adjusted operational sales were originally set to grow at a rate of 6.2%-7.2%. But now, the company is forecasting an improvement of 7.2%-7.7%. 

The company also revisited its adjusted EPS, which was $10-$10.10, aiming for $10.07-$10.13. If Johson & Johnson hits this target it will be above the consensus of $10.03. 

Surprisingly, this news sent shares as much as 1.6% lower in Tuesday morning’s trading session. The stock has since recovered and sits just 0.5% lower than it opened. Still, there was hope this news would signal a positive price trend as the stock is now down more than 3% in the last month.

So, what does this mean for current or prospective investors? We’ve uncovered 3 things you need to see through the VectorVest stock analysis software…

JNJ Has Good Upside Potential With Fair Safety and Timing

The VectorVest system simplifies your trading strategy by giving you clear, actionable insights in just 3 ratings. These are relative value (RV), relative safety (RS), and relative timing (RT). Each of these sits on an easy-to-understand scale of 0.00-2.00, with 1.00 being the average.

Based on the overall VST rating for a given stock, you’re given a clear buy, sell, or hold recommendation - eliminating human error, emotion, and guesswork from your strategy. As for JNJ, here’s what we found:

• Good Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted three years out) to AAA corporate bond rates and risk. As for JNJ, the RV rating of 1.10 is good. The stock has a current value of $171.65 compared to its current price of $156.69.
• Fair Safety: The RS rating assesses a stock’s risk. It analyzes a company’s financial consistency & predictability, debt-to-equity ratio, and business longevity. JNJ is a fairly safe stock with an RS rating of 1.07.
• Fair Timing: The one thing holding the stock back right now is a below-average RT rating of 0.85, which is still considered fair nonetheless. The RT rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.

The overall VST rating of 1.00 is right at the average - and VectorVest rates this stock a “hold” accordingly. We encourage you to learn more about how the system works and gain further insights through a free stock analysis today!

Want These Types of Insights at Your Fingertips so You Can Win More Trades?

Use VectorVest to analyze any stock free. VectorVest is the only stock analysis tool and portfolio management system that analyzes, ranks and graphs over 18,000 stocks each day for value, safety, and timing and gives a clear buy, sell or hold rating on every stock, every day.

VectorVest advocates buying safe, undervalued stocks, rising in price. JNJ beat the top and bottom line in the 3rd quarter while raising its forecast for the remainder of the year. Still, the stock slipped in Tuesday’s trading session. It has good upside potential, but safety and timing are just fair right now.

Before you invest, check VectorVest! Click here to ANALYZE ANY STOCK FREE and see our system in action!