Aug 04, 2017

Johnson and Johnson, Inc. (NYSE: JNJ) Zacks Rank 3-Hold

$133.35 USD ( As of 08/03/17 ) Style:Value: Growth: Momentum: VGM:

Data Overview Summary

52 Week High-Low $137.08 - $109.32 J&J reported mixed Q2 results, beating on earnings but missing on sales. Sales in
20 Day Average Volume 5,428,345
J&J’s domestic Pharma segment have decelerated this year as a number of key
growth drivers like Remicade and Concerta are facing competition. However, J&J is
Beta 0.78
optimistic that sales growth will accelerate in 2H17. We believe that new products
Market Cap 357.91 B including Xarelto, Stelara, Darzalex, and Imbruvica remain the key to growth.
Dividend / Div Yld $3.36 / 2.52% Meanwhile, share buybacks and the restructuring initiative should provide bottom-line
Industry Large Cap Pharmaceuticals
support. J&J is also making rapid progress with its pipeline and line extensions. The
Actelion buy adds an attractive new therapeutic area – PAH. J&J’s shares have
Industry Rank 103 / 265 (Top 39%)
outperformed the large-cap pharma industry this year so far. However, headwinds like
Current Ratio 2.52 negative currency movement, generics, pricing pressure and soft global market
Debt/Capital 27.75% conditions remain. Sluggish growth in the Consumer segment due to category
slowdown is also a concern.
Net Margin 22.52%

Price/Book (P/B) 5.09

Price/Cash Flow (P/CF) 21.44 Elements of the Zacks Rank

Earnings Yield 5.43%
Agreement Estimate Revisions (60 days)
Debt/Equity 0.38

Value Score 63% 75% 100% 60%

P/E (F1) 18.56

P/E (F1) Rel to Industry 11.44 Q1 (Current Qtr) Q2 (Next Qtr) F1 (Current Year) F2 (Next Year)
PEG Ratio 3.10 Revisions: 8 Revisions: 8 Revisions: 11 Revisions: 10
Up: 5 Down: 3 Up: 6 Down: 2 Up: 11 Down: 0 Up: 6 Down: 4
P/S (F1) 4.71

P/S (TTM) 4.93

Magnitude Consensus Estimate Trend (60 days)
P/CFO 21.44

P/CFO Rel to Industry 23.96

EV/EDITDA Annual 14.23

Growth Score
Proj. EPS Growth (F1/F0) 7.14% 60 30 7 Current 60 30 7 Current 60 30 7 Current 60 30 7 Current
Days Days Days Days Days Days Days Days Days Days Days Days
Hist. EPS Growth (Q0/Q-1) 1.32 Q1 +1.13% Q2 +1.75% F1 +1.13% F2 +0.26%
Qtr CFO Growth -32.33

2 Yr CFO Growth 1,143.13

Upside Zacks Consensus Estimate vs. Most Accurate Estimate
Return on Equity (ROE) 26.00%

(NI - CFO) / Total Assets -0.24

Asset Turnover 0.50

Momentum Score Most Accurate: 1.79 Most Accurate: 1.74 Most Accurate: 7.18 Most Accurate: 7.73
Zacks Consensus: 1.79 Zacks Consensus: 1.74 Zacks Consensus: 7.18 Zacks Consensus: 7.73
1 week Volume change 5.67%
Q1 0.00% Q2 0.00% F1 0.00% F2 0.00%
1 week Price Cng Rel to Industry 5.11%

(F1) EPS Est 1 week change 0.00%

Surprise Reported Earnings History
(F1) EPS Est 4 week change 1.23%

(F1) EPS Est 12 week change 1.29%

(Q1) EPS Est 1 week change 0.00%

Reported: 1.83 Reported: 1.83 Reported: 1.58 Reported: 1.68 Average 4 Qtr
Surprise
Estimate: 1.79 Estimate: 1.77 Estimate: 1.56 Estimate: 1.65
Q End 06/17 Q End 03/17 Q End 12/16 Q End 09/16

© 2017 Zacks Investment Research, All Rights Reserved 10 S. Riverside Plaza Suite 1600 · Chicago, IL 60606
 The data on the front page and all the charts in the report represent market data as of 08/03/17, while the report's text is as of
07/31/2017

Overview
New Brunswick, NJ based Johnson & Johnson, Inc. focuses on the
development, manufacturing and marketing of pharmaceutical,
medical, and consumer related healthcare products. Its worldwide
business is divided into three segments: Pharmaceutical, Medical
Devices and Consumer. In full year 2016, these segments
contributed 46.5%, 34.9% and 18.6%, respectively, to the
company’s total revenue of $71.9 billion (up 2.6%).

Pharmaceutical Segment – Johnson & Johnson has one of the

most diverse revenue streams in the industry within the
pharmaceutical division. The company has several multi-million dollar
drugs covering a broad range of areas such as neuroscience;
cardiovascular and metabolism; immunology; oncology and infectious
diseases/vaccines. Pharmaceutical sales in 2016 totaled $33.5
billion, up 6.5%. Several products in this segment are facing generic
competition.

Medical Devices Segment – This segment offers products in the

orthopaedic, surgery, cardiovascular, diabetes care and vision care
markets. The segment posted sales of $25.1 billion in 2016, down
0.1%. The company divested its ortho-clinical diagnostics business to
The Carlyle Group for about $4 billion in Jun 2014. In Oct 2015, J&J
sold its Cordis business to Cardinal Health for about $2 billion. J&J is
also evaluating “potential strategic options” for its diabetes care unit. J&J announced a restructuring initiative which will see the
company cutting approximately 3,000 jobs in this segment. J&J is on track to deliver approximately $800 million to $1 billion in annual
savings from the restructuring effort with the majority expected by the end of 2018.

Consumer Segment – This segment includes a broad range of products covering the areas of baby care, beauty, oral care, wound
care and women’s health care, as well as over-the-counter (OTC) pharmaceutical products. The division posted sales of $13.3 billion
in 2016, down 1.5%..

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 Reasons To Buy:
Shares Outperforming Industry: J&J’s share price is up 14.4% this year so far. This A diversified business
compares favorably with an 10.5% increase witnessed by the Zacks classified Large- model, financial strength,
Cap Pharma industry. new products and a deep
pipeline will continue
Deals to Boost Revenues: Johnson & Johnson struck several deals, which should boost helping the company pave
its top line. The Cougar Biotechnology acquisition allowed Johnson & Johnson to its way through tough
strengthen its oncology portfolio especially in the areas of advanced prostate cancer, situations.
breast cancer and multiple myeloma. The acquisition has proved its worth with the
approval of prostate cancer therapy, Zytiga.

The Aug 2012 Aragon acquisition added Aragon’s lead pipeline candidate, JNJ-927 (apalutamide), which is in late-stage
development for pre-metastatic prostate cancer (CRPC), to J&J's pipeline This acquisition signifies Johnson & Johnson’s attempt to
strengthen its prostate cancer franchise especially once Zytiga loses exclusivity. The successful development of apalutamide will
consolidate the company’s position in the prostate cancer market. The company has also tied up with TESARO for the
development and commercialization (except) of niraparib in prostate cancer.

Johnson & Johnson also has a deal with Achillion for the development of hepatitis C virus (HCV) candidates. In Feb 2017, J&J
acquired Abbott’s vision care business, Abbott Medical Optics for $4.325 billion. In Jun 2017, J&J acquired Swiss biotech Actelion
for $30 billion, which will diversify its revenues in the pulmonary arterial hypertension (PAH) category and bolster long-term growth.

The company has sufficient funds to pursue additional bolt-on acquisitions and deals to boost its portfolio. In 2016, it spent $5 billion
on M&A and major licensing deals. The company is also returning value to shareholders through share buybacks. J&J completed
approximately 75% of its $10 billion share buyback program in 2016 and fully completed the program in the first half of 2017.

Deep Pipeline: Johnson & Johnson continues to work on strengthening its Pharma segment, which has been driving revenues over
the past few quarters.

Johnson & Johnson expects to launch or file for approval for more than 10 new blockbuster products by 2021. The company said
that each of these products has blockbuster potential. The company is targeting more than 50 line extensions of existing and new
drugs as well. This should help lessen the impact of the genericization of key products in the pharma portfolio.

The company’s key areas of focus include immunology, infectious diseases & vaccines, neuroscience, cardiovascular &
metabolism, and oncology while a sixth therapeutic area -- pulmonary arterial hypertension -- was added with the Actelion
acquisition.

Key late-stage candidates in the company’s pipeline include esketamine (treatment-resistant depression – filing expected in 2018),
apalutamide (pre-metastatic prostate cancer – filing expected in 2017), sirukumab (rheumatoid arthritis – filed in EU and U.S. in Sep
2016 - as well as major depressive disorder), guselkumab (psoriasis – under review in the EU; phase III for psoriatic arthritis),
niraparib (prostate cancer - filings expected in 2019), talacotuzumab (acute myeloid leukemia), erdafitinib (solid tumors), and
imetelstat (myelofibrosis) among others. Guselkumab/Tremfya was approved in the U.S. in Jul 2017 for plaque psoriasis while
sirukumab could gain approval and launched later this year.

Meanwhile, the company is moving a 3DAA combination of Olysio, AL-335 and odalasvir into late-stage studies for HCV. It has also
filed regulatory applications in both the U.S. and the EU for its two-drug HIV regimen of rilpivirine and dolutegravir as a single tablet.
J&J is also developing Symtuza, a darunavir-based once-daily single-tablet regimen for the treatment of HIV.

New Products Hold Promise: Apart from established products in the pharma segment, new products like Imbruvica, Xarelto and
Darzalex are performing well. Zytiga and Imbruvica are notably successful launches in the company’s oncology portfolio. The
company is also working on expanding the label of currently marketed products like Simponi, Stelara, Zytiga and Imbruvica. New
products introduced within the past five years accounted for approximately 22% of 2016 sales.

For Imbruvica, an additional seven indications have been approved since its launch and the drug is also being evaluated in a
number of combination therapies. Darzalex is being evaluated in a comprehensive clinical development program that includes five
phase III studies across a range of treatment settings in multiple myeloma, such as in frontline and relapsed settings. For Xarelto,
there are eight new indications seeking studies underway as part of the EXPLORER clinical development program. We believe in
the forthcoming period, these drugs will contribute significantly to the company’s top line.

In addition, other marketed drugs like Simponi and Stelara hold promise. In 2016, Stelara’s label was expanded in the U.S. as well
as EU for the treatment of Crohn’s disease. J&J is also evaluating Stelara as a subcutaneous treatment for UC (phase III ongoing)
and axial spondylytis (phase III).

Moreover, in Dec 2016, J&J filed two line extensions for Simponi Aria in psoriatic arthritis and ankylosing spondylitis. Johnson &
Johnson’s new product launch track record has been good.

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 Eyeing Emerging Markets: Johnson & Johnson is looking to increase its presence in emerging markets as they hold immense
potential. Given the huge potential, the company has set up manufacturing and R&D centers in Brazil, China and India, and has
almost doubled its footprint in emerging markets in the last five years. These countries are trying to make healthcare accessible to
more people primarily by improving insurance coverage. Johnson & Johnson intends to continue working on strengthening its
pipeline in Japan as well as China.

The company is also working on turning around its Medical Devices business by developing innovative products, expanding global
presence and implementing novel commercial models. Meanwhile, the restructuring initiative in this segment is expected to deliver
approximately $800 million - $1 billion in annual savings with the majority expected by the end of 2018. Management expects the
Medical Devices segment to grow faster in 2017. In fact, sales in the segment improved from 2016 levels in the first two quarters of
2017.

Reasons To Sell:
Generics and Currency Hit Sales: Quite a few products in the company’s portfolio Challenges for the
including Invega and Ortho Tri-Cyclen Lo are facing generic competition. Moreover, company remain in the
biosimilar competition for Remicade entered several major EU markets in Feb 2015. form of generic
Pfizer launched its biosimilar version of Remicade in the U.S. in late Nov 2016. Though competition, pricing
the rate of penetration of a biosimilar entrant may be modest, the launch brings a pressure and pipeline
certain element of uncertainty to the Pharma segment as there may be an additional setbacks.
impact as the year progresses. In Apr 2017, Samsung Bioepis’ biosimilar version of
Remicade also received FDA approval. Zytiga and Xarelto are also facing patent
challenges in the U.S. HCV sales continue to decline in the face of intense competition. Meanwhile, negative currency movement
will remain a headwind in 2017.

The Pharma segment is expected to see slower growth in 2017 as a number of key growth drivers like Remicade and Concerta
have slowed down and are facing competition.

FDA Warnings Could Affect Sales: The labels of products like Remicade and Simponi contain warnings regarding the risk of cancer
in children and teenagers. The inclusion of such warnings could lead to restricted sales of these products. In Feb 2010, the FDA
approved a risk management program (RiskMap) to inform about the risks of erythropoiesis-stimulating agents (ESAs). ESAs are
approved for the treatment of anemia that might arise out of kidney failure from certain kinds of chemotherapy. Johnson &
Johnson’s Procrit is an ESA which recorded 2016 global sales of $1.1 billion, up 3.5%. The inclusion of a safety-related boxed
warning on the label of Procrit has had an adverse impact on product sales and the introduction of the RiskMap is likely to restrict
sales further. Meanwhile, sales of the company’s SGLT2 inhibitor, Invokana/Invokamet, could be affected by the addition of
warnings regarding the increased risk of bone fractures.

Pipeline Setbacks: Johnson & Johnson has suffered its share of pipeline setbacks. These include failure to gain approval for
ceftobiprole (the company returned global rights for the candidate to its Swiss partner, Basilea Pharmaceuticals), a third CRL for the
supplemental new drug application (sNDA) for Xarelto for acute coronary syndrome (ACS) and the withdrawal of the EU application
for an additional indication for Velcade for the treatment of patients with relapsed follicular non-Hodgkin lymphoma. Johnson &
Johnson also announced that it no longer intends to seek EU approval for Risperdal Consta for bipolar I disorder. The company also
terminated its plans to seek approval for Invega for bipolar disorder. Another setback is bapineuzumab IV’s failure in two phase III
studies and its discontinuation.

Last Earnings Report

J&J Beats on Q2 Earnings, Lags Sales, Ups 2017 View Quarter Ending 06/2017

Report Date Jul 18, 2017

J&J’s second-quarter 2017 earnings came in at $1.83 per share, beating the Zacks
Consensus Estimate of $1.79 and increasing 5.2% from the year-ago period. Sales Surprise -0.28%
EPS Surprise 2.23%
Including amortization expense and special items, J&J reported second-quarter earnings of Quarterly EPS 1.83
$1.40 per share, down 2.1% from the year-ago period.
Annual EPS (TTM) 6.92

Sales came in at $18.84 billion, slightly missing the Zacks Consensus Estimate of $18.89
billion by 0.3%. Sales increased 1.9% from the year-ago quarter, reflecting an operational
increase of 2.9% and a negative currency impact of 1%. Organically, excluding the impact of acquisitions and divestitures, sales
increased 0.5% on an operational basis.

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 Higher sales from new products across all three segments as well as the positive contribution from recent acquisitions pulled up the top
line in the quarter. Lower sales in the international Consumer and domestic Pharmaceutical segment hurt revenues to an extent.
Unfavorable comparisons from last year’s second quarter also hurt sales in the quarter.

Second-quarter sales grew 1.6% in the domestic market to $9.73 billion and 2.3% in international markets to $9.11 billion, reflecting
4.4% operational growth, partially offset by a 2.1% negative currency impact.

Segment Details

Pharmaceuticals segment sales declined 0.2% year over year to $8.64 billion, reflecting 1% operational growth and 1.2% negative
currency impact. Higher sales in international markets offset a weaker performance in the U.S.

Sales in the domestic market declined 2.6% to $5.01 billion, while international sales grew 3.3% to $3.63 billion, reflecting 6.1%
operational growth, partially offset by a 2.8% negative currency impact.

New products like Imbruvica (cancer) and Darzalex (multiple myeloma) continued to perform well. Other growth drivers were Stelara
and Invega Sustenna.

Imbruvica continues to gain share across all indications globally. Stelara also gained market share in the quarter backed by strong
adoption for the newer indication of Crohn's disease. Darzalex enjoyed strong adoption in outside U.S. markets and accelerated
adoption in the U.S. across all lines of therapy.

In the cardiovascular metabolic space, pricing pressure and competitive payer dynamics hurt sales of Invokana and Xarelto. However,
management expects sales of Xarelto to pick up in the second half of the year.

Similar to the first quarter, increased rebating/discounting in managed care and government channels hurt sales of some products in
the quarter. Invokana/Invokamet sales declined 23% due to increasing discounts for managed care contracting and higher utilization in
the Medicaid channel.

Zytiga sales fell 7.2% due to higher utilization of independent patient assistance foundations, which has been hurting sales since the
past two quarters.

Concerta declined 23.9% due to generic competition.

Sales of Remicade declined 14% in the quarter with U.S. sales declining 13.9% and international sales declining 5.6% due to biosimilar
competition. Pfizer’s launch of Inflectra injection, a biosimilar version of Remicade, had a minor impact on share erosion of Remicade
in the second quarter. However, Remicade’s sales erosion in the second quarter was below management’s expectations.
Management also said that Remicade erosion, despite the entrance of a new biosimilar from Samsung, will be less than originally
expected.

Medical Devices segment sales continued to improve, coming in at $6.73 billion, up 4.9% from the year-ago period. It included an
operational increase of 5.9% and negative currency movement of 1%.

Sales gained mainly from the inclusion of the first full quarter of revenues from Abbott Medical Optics acquisition, which added 5.1% to
sales growth. Excluding the impact of all acquisitions and divestitures, on an operational basis, worldwide sales increased 1.1%.

Sales in the domestic market rose 6.1% year over year to $3.23 billion. International market sales increased 3.9% (operational increase
of 5.8%) year over year to $3.5 billion.

Operational growth was driven by Advanced Surgery products, electrophysiology products in the Cardiovascular business and Acuvue
contact lenses in the Vision Care business, which made up for a weaker sales performance in the Diabetes Care unit

The Consumer segment recorded revenues of $3.48 billion in the reported quarter, up 1.7% year over year (operational increase of
2.3%). Foreign currency movement negatively impacted sales in the segment by 0.6%. Sales in the domestic market grew 7.4% from
the year-ago period to $1.49 billion.

Slower growth in baby care products was partially offset by growth in beauty and over-the-counter products. Sales in the segment were
hurt by global consumer category slowdown across many of the company’s markets, though to a lesser extent than the first quarter.

Meanwhile, the international segment recorded a decline of 2.2% to $1.99 billion, reflecting an operational decline of 1.1% and a
negative currency impact of 1.1%.

Margins Discussion

Cost of goods sold, as a percentage of sales, rose 60 basis points to 27.9%, primarily due to transactional currency and product mix

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 benefits. Selling, marketing and administrative expenses were flat year over year. Research and Development costs, as a percentage
of sales, were also flat with the prior-year quarter at 12.1%.

2017 Guidance Raised

J&J raised its earnings guidance for 2017 and increased the lower end of its sales outlook.

J&J expects 2017 adjusted earnings per share in the range of $7.12 - $7.22, including currency impact, compared with $7.00 - $7.15
expected previously. The earnings guidance reflects expected operational constant currency growth rate of 7% to 8%, higher than 6%
to 8% expected previously.

The revenue guidance is in the range of $75.8 billion to $76.1 billion, compared with $75.4 billion to $76.1 billion expected previously
mainly due to more favorable FX rates. Currency fluctuations are expected to impact revenues by about 10 bps (previously 100 bps)
and earnings by $0.05 per share (previously $0.12 per share) in 2017.

The operational constant currency sales growth rate was in fact lowered and is now expected to be between 5.5% to 6% versus 5.8%
and 6.8% previously Organic sales growth, excluding the impact of acquisitions and divestitures, is expected to be in the range of 2.5%-
3%. This range is also lower than 3%-3.5% expected previously and marks a sharp decline from 7.4% in 2016.

The guidance includes the impact of the Abbott Medical Optics acquisition as well as Remicade biosimilar. However, the company does
not expect any biosimilar entrants for Procrit, Zytiga, Trevicta, Risperdal Consta, or Invega Sustenna in the U.S. in 2017.

Adjusted pre-tax operating margins are expected to be flat or slightly decrease in 2017. This compares unfavorably with the previous
expectation of flat or slightly higher margins as investments levels will increase in the second half

Adjusted tax rate guidance was maintained in the range of approximately 19% to 20%.

Chief executive officer, Alex Gorsky said that J&J’s sales and earnings growth will accelerate in the second half of the year.
Organically, excluding acquisition divestitures and purchase price adjustment, sales grew 2.4% in the first half of the year. The
company expects organic sales growth of 4% in the second half of the year with sales expected to accelerate in all the three segments.

Pharma segment will benefit from easier comps in the second half compared with the first, continued growth of Imbruvica and
Darzalex, upcoming new product launches like Tremfy, better performance in Stelara as well as Xarelto and meaningful contribution
from Actelion. These positives will offset loss of sales of some drugs like Invokana due to higher managed care discounting.

Increased contribution from new products and strong growth in Vision Care are expected to lead to better sales trends in the Medical
Devices segment. However, weaker macroeconomic dynamics in some consumer categories and geographic markets will continue to
put pressure on sales in the Consumer segment.

Recent News
Vaccine Collaboration with Bavarian Nordic – Jul 26

J&J announced that it has formed a collaboration with Bavarian Nordic to develop vaccines regimes against HBV virus and HIV-1 virus
by leveraging Bavarian Nordic’s MVA-B technology with J&J’s AdVac and DNA-based vaccine technologies.

HIV Data in Lancet – Jul 24

J&J announced that data from the Phase IIb LATTE-2 study published in The Lancet showed that a combination regimen of HIV
injectible medicines, J&J’s rilpivirine and Glaxo’s cabotegravir, when given together every 4 or 8 weeks was as effective as 3-drug oral
antiretroviral therapy (ART) at maintaining HIV-1 viral suppression through 96 weeks (HIV-1 RNA <50 copies per mL).

Symtuza Gets Positive CHMP Opinion – Jul 21

J&J announced that it has received a positive opinion from the CHMP of the EMA recommending marketing authorization for Symtuza,
its darunavir-based once-daily single-tablet regimen for the treatment of HIV.

Announces Dividend – Jul 17

J&J announced that its board of directors has declared a cash dividend of $0.84 per share for the third quarter of 2017. The dividend is
payable on Sep 12, 2017 to shareholders of record at the close of business on Aug 29, 2017.

FDA Grants Approval to Guselkumab – Jul 13

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 J&J announced that the FDA has approved guselkumab for the treatment of moderate-to-severe plaque psoriasis. The drug will be
marketed by the trade name of Tremfya. The drug was approved under an accelerated process, following the filing of a priority voucher
by J&J. Guselkumab is under review in the EU and Japan for the plaque psoriasis indication.

FDA Grants Priority Review to Lower Dose of Xarelto – Jun 28

J&J announced that the FDA has granted priority review to a sNDA of Xarelto for a label expansion to include a 10 mg dose to reduce
the risk of recurrent venous thromboembolism (VTE). Xarelto is currently approved in a 20 mg dose formulation.

Darzalex Gets FDA Approval for Combination Use with Pomalyst – Jun 16

J&J announced that Darzalex has been approved by the FDA for use in combination with Celgene’s multiple myeloma drug Pomalyst
(pomalidomide) and dexamethasone. The combination has been approved for the treatment of patients with multiple myeloma who
have received at least two prior therapies including Revlimid (an immunomodulatory agent) and a proteasome inhibitor (PI).

The approval was based on data from the phase Ib EQUULEUS study, which showed an overall response rate (ORR) of 59.2% with
Darzalex in combination with Pomalyst and dexamethasone in the above mentioned patients.

Completion of Actelion Acquisition – Jun 16

J&J announced that it has completed the previously announced acquisition of Swiss biotech Actelion for an aggregate value of $30
billion in cash.

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 Industry Analysis Zacks Industry Rank: 103 / 265 (Top 39%) Top Peers

Eli Lilly and Company (LLY)

H Lundbeck A/S (HLUYY)
Novo Nordisk A/S (NVO)
Bristol-Myers Squibb Company (BMY)
AbbVie Inc. (ABBV)
GlaxoSmithKline PLC (GSK)
Merck & Company, Inc. (MRK)
Novartis AG (NVS)

Industry Comparison Large Cap Pharmaceuticals | Position in Industry: 3 of Industry Peers

14

JNJ X Industry S&P 500 PFE BAYRY RHHBY

VGM Score - -
Market Cap 357.91 B 110.67 B 20.59 B 199.51 B 104.20 B 217.07 B
# of Analysts 15 8.5 14 14 3 5
Dividend Yield 2.90% 2.87% 1.82% 3.48% 1.60% 2.50%

Value Score - -
Cash/Price 15.74 12.50 9.77 2.92 20.83 11.64
EV/EBITDA 14.23 14.40 12.74 NA 9.78 NA
PEG Ratio 3.10 2.23 1.99 2.42 2.18 2.28
Price/Book (P/B) 5.09 5.60 3.22 3.34 3.95 8.10
Price/Cash Flow (P/CF) 21.44 18.45 13.49 10.52 11.33 17.70
P/E (F1) 18.56 16.36 18.98 13.07 14.49 16.01
Price/Sales (P/S) 4.71 4.04 2.50 3.79 1.82 3.88
Earnings Yield 5.43% 6.11% 5.25% 7.78% 6.90% 6.25%
Debt/Equity 0.38 0.55 0.68 0.52 0.69 0.64
Cash Flow ($/share) 8.28 4.31 5.41 3.38 12.81 1.80

Growth Score - -
Hist. EPS Growth (3-5 yrs) 7.14% 8.53% 7.16% 6.22% 9.92% 20.24%
Proj. EPS Growth (F1/F0) 6.75% 7.03% 9.44% 6.62% 7.35% 11.80%
Curr. Cash Flow Growth 6.26% 4.59% 5.40% 8.49% 6.24% 1.38%
Hist. Cash Flow Growth (3-5 yrs) 5.75% -3.52% 6.71% -5.51% 2.81% -1.55%
Current Ratio 2.52 1.33 1.37 1.25 1.53 1.27
Debt/Capital 27.75% 35.65% 41.65% 34.41% 40.87% 39.16%
Net Margin 22.52% 17.14% 9.86% 15.84% 10.15% NA
Return on Equity 26.00% 26.68% 15.93% 24.35% 18.98% 45.26%
Sales/Assets 0.50 0.51 0.54 0.31 0.65 0.64
Proj. Sales Growth (F1/F0) 5.59% 5.44% 5.19% -0.07% 10.34% 12.83%

Momentum Score - -
Daily Price Chg 0.90% 0.27% -0.10% 1.55% 0.00% 0.00%
1 Week Price Chg 5.11% 3.15% -0.00% 4.48% 3.24% 3.94%
4 Week Price Chg 0.63% 0.63% 2.17% 0.63% 0.02% 1.63%
12 Week Price Chg 8.24% 0.92% 3.07% 1.18% 0.57% -4.28%
52 Week Price Chg 7.66% 1.46% 11.66% -4.89% 20.69% 0.54%
20 Day Average Volume 5,426,092 3,299,686 0 16,810,562 68,272 1,753,475
(F1) EPS Est 1 week change 0.00% 0.23% 0.08% 0.17% 1.16% 0.76%
(F1) EPS Est 4 week change 1.23% 0.81% 0.32% 0.09% -2.58% 2.05%
(F1) EPS Est 12 week change 1.29% 1.19% 1.00% -0.04% 2.54% 3.38%
(Q1) EPS Est Mthly Chg 0.99% -0.16% 0.00% -2.33% NA NA

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 Zacks Rank Education
The Zacks Rank is calculated from four primary inputs: Agreement, Magnitude, Upside and Surprise.

Agreement
This is the extent which brokerage analysts are revising their earnings estimates in the same
direction. The greater the percentage of estimates being revised higher, the better the score for this
component.

For example, if there were 10 estimate revisions over the last 60 days, with 8 of those revisions up,
and the other 2 down, then the agreement factor would be 80% positive. If, however, 8 were to the
downside with only 2 of them up, then the agreement factor would be 80% negative. The higher the
percentage of agreement the better.

Magnitude
This is a measure based on the size of the recent change in the current consensus estimates. The
Zacks Rank looks at the magnitude of these changes over the last 60 days.

In the chart to the right, the display shows the consensus estimate from 60-days ago, 30-days ago,
7-days ago, and the most current estimate The difference between the current estimate and the
estimate from 60-days ago is displayed as a percentage. A larger positive percentage increase will
score better on this component.

Upside
This is the difference between the most accurate estimate, as calculated by Zacks, and the
consensus estimate. For example, a stock with a consensus estimate of $1.00, and a most
accurate estimate of $1.05 will have an upside factor of 5%.

This is not an indication of how much a stock will go up or down. Instead, it's a measure of the
difference between these two estimates. This is particularly useful near earnings season as a
positive upside percentage can be used to help predict a future surprise.

Surprise
The Zacks Rank also factors in the last few quarters of earnings surprises. Companies that have
positively surprised in the recent past have a tendency of positively surprising again in the future (or
missing if they recently missed).

A stock with a recent track record of positive surprises will score better on this factor than a stock
with a history of negative surprises. These stocks will have a greater likelihood of positively
surprising again.

Zacks Style Score Education

The Zacks Style Score is as a complementary indicator to the Zacks Rank, giving investors a way to
focus on the best Zacks Rank stocks that best fit their own stock picking preferences. Value Score

Academic research has proven that stocks with the best Growth, Value, and Momentum Growth Score
characteristics outperform the market. The Zacks Style Scores rate stocks on each of these
individual styles and assigns a rating of A, B, C, D and F. An A, is better than a B; a B is better than Momentum Score
a C; and so on.
VGM Score
As an investor, you want to buy stocks with the highest probability of success. That means buying
stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Style Score of an A or a B.

Zacks Equity Research: JNJ www.zacks.com Page 10 of 11

 Disclosures
The analysts contributing to this report do not hold any shares of this stock. The EPS and revenue forecasts are the Zacks
Consensus estimates. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the
analysts' personal views as to the subject securities and issuers. Zacks certifies that no part of the analysts compensation was, is, or
will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional
information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we
believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the
report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed
herein are subject to change. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities
herein mentioned. Zacks or its officers, employees or customers may have a position long or short in the securities mentioned and buy
or sell the securities from time to time. Zacks uses the following rating system for the securities it covers which results from a
proprietary quantitative model using trends in earnings estimate revisions. This model is proven most effective for judging the timeliness
of a stock over the next 1 to 3 months. The model assigns each stock a rank from 1 through 5. Zacks Rank 1 = Strong Buy. Zacks Rank
2 = Buy. Zacks Rank 3 = Hold. Zacks Rank 4 = Sell. Zacks Rank 5 = Strong Sell. We also provide a Zacks Industry Rank for each
company which provides an idea of the near-term attractiveness of a company s industry group. We have 264 industry groups in total.
Thus, the Zacks Industry Rank is a number between 1 and 264. In terms of investment attractiveness, the higher the rank the better.
Historically, the top half of the industries has outperformed the general market.

Zacks Equity Research: JNJ www.zacks.com Page 11 of 11