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Johnson & Johnson (NYSE:JNJ) is scheduled to release its 1st quarter earnings on Tuesday, April 16, at 8:30 am ET. Below I have provided a fundamental analysis of the stock as well as why I believe J&J is a solid buy for anyone looking to profit from one of the biggest players in the health sector.

Profile and Estimates

Johnson & Johnson currently has a market cap of $228.01 billion and trades for $82.08 per share. Shares are up 17.23% YTD and trade 36% above their 52-week low of $60.14. Analysts have a mean price target of $78.35 and median price target of $78.00 on JNJ shares; 17 analysts have an average EPS estimate of $1.41 for this quarter on estimated revenues of $17.46 billion. Per Yahoo finance, JNJ has surpassed estimated EPS in the previous four quarters:

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Positives for J&J

  • Dividend yield of 2.87%.
  • Operating margins of 23.6% and ROE of 17.8 are both above the industry averages 22.3% and 17.2 respectfully.
  • D/E of 0.2 is below the industry averages 0.4.
  • Cash from operating activities of $15.3 billion in 2012 allowed J&J to repurchase $12.9 billion of its shares outstanding.
  • Recent approval of blockbuster drug Invokana is projected to generate upwards of $800 million annual for J&J.
  • Diverse inventory and healthcare segments offers investors protection from downturns in any one drug or segment.
  • Strong performance and potential growth from recently launched products ZYTIGA, INVEGA, INCIVO and STELARA prove the depth of J&J's pipeline.

Bottom Line

J&J offers a diversified approach to investing in pharmaceuticals due to its wide product range. Investors can be sure that its 2.99% dividend is protected due to its large and consistent free cash flows. While I feel shares are fully valued, any drop from an earnings miss or market correction would be a good opportunity to pick up shares at a more attractive price. At this time, I would only be interested at $74.00 per share.

Source: Time To Buy Johnson & Johnson? Highlights And Earnings Expectations