How Will Johnson & Johnson Perform In 2018?
We have created an interactive dashboard on Johnson & Johnson’s (NYSE:JNJ) expected performance in 2018. You can adjust the revenue and margin drivers to see the impact on the company’s performance. Overall, we forecast revenue growth of around 5% and EPS of just under $8 for 2018.
Pharmaceuticals Business Will Lead Revenue Growth In 2018
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We expect J&J’s Pharmaceuticals revenue to grow by 8% in 2018, primarily led by oncology drugs, along with cardiovascular, metabolism & other drugs. Within oncology, Imbruvica and Darzalex have seen solid growth of late, and we expect this trend to continue in 2018. In the Consumer Healthcare business, we expect revenues to grow in low-single-digits, as skin care revenue growth will likely offset any pressure on baby care and other revenues. Note that baby care and other revenues have seen recent declines amid competition from private labels. Meanwhile, we forecast Medical Devices revenues to grow in low-single-digits. The company saw a strong uptick in vision care sales in 2017 due to the AMO acquisition, and we expect the company to benefit from that in 2018 as well.
5% Forecast Growth In 2018 Net Income
J&J’s Net Income Margin has been around 26% on average over the past few years, and we expect that to remain relatively steady in 2018. Given our revenue growth forecast, we forecast around 5% growth in net income in 2018 to about $21 billion.
$149 Price Estimate For J&J
Our Net Income forecast of $21 billion translates into EPS of about $7.80 in 2018. We estimate a price-earnings multiple of around 19 for J&J, which is below many pharma industry multiples, reflecting the risk of biosimilars impacting the company’s future growth. This translates into a price estimate of $149 for Johnson & Johnson’s stock, which is around 15% above the current market price.
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