This morning saw the release of an earnings report from Johnson & Johnson (NYSE:JNJ). The consumer goods and health care products firm showed earnings of $1.48 per share for the three months ending June 30, on revenue of $17.9 billion for the period. Shares in Johnson & Johnson will open at $90.40 later this morning.
Analysts following Johnson & Johnson (NYSE:JNJ) were looking for earnings of $1.39 per share for the June quarter on revenues totaling $17.7 billion in the same period. In the same three months of 2012, Johnson & Johnson (NYSE:JNJ) earned $1.30 per share on revenue of $16.5 billion.
Value Investing
Johnson & Johnson (NYSE:JNJ) is a talked about company in value investing circles because the company is a solid performer in the health care field with a good dividend yield and it has several promising drugs in its pipeline. The company has also been mentioned several times as a possible candidate for splitting up which could result in a windfall for investors.
So far in 2013, the company’s performance has surpassed the expectations of most. Since January the company’s value has risen by more than 28 percent, beating gains made by the wider market and those made by its closest rivals. Johnson & Johnson (NYSE:JNJ) appears to be a solid bet going forward, but with a current P/E of more than 24 on 2012 earnings, it might be above fair value.
Fair Value
Before the company’s earnings were announced this morning, many analysts had placed buy ratings on the stock with price targets set a little above the markets close on Monday. There appears to be growing restraint in analysts approach to the equity after its massive gains in the first half of the year.
Jeffries analysts have placed a price target of $91 on Johnson & Johnson (NYSE:JNJ) shares, while analysts at Barclays placed an overweight rating on the stock and gave it a price target of $95. The healthcare company’s strong performance is worrying, even as its fundamentals appear to keep getting stronger.
In the pharmaceutical business one bad drug trial can mean chaos in the share price. Johnson & Johnson has wide revenue base and is insulated from much of that shock, but its growth is not. Investors looking to buy into the company for a quick turnaround may well be disappointed, those looking for a decent dividend yield on a stock that might grow in value could be in luck.
