Selected stock price target news of the day - July 24, 2023

By Matthew Otto

Johnson & Johnson Advancing Spin-Off Strategy. Starting With Kenvue

Last week Johnson & Johnson outperformed Wall Street expectations, with growth in its medical technology business contributing significantly. The adjusted earnings per share were $2.80, exceeding the expected $2.62. The total revenue for the second quarter reached $25.53 billion, surpassing the anticipated $24.63 billion. The company’s sales during this quarter saw a 6.3% growth from the same period last year.

The pharmaceutical firm registered a net income of $5.14 billion or $1.96 per share, an increase from the $4.8 billion or $1.80 per share from the same period a year ago. Following the strong performance, Johnson & Johnson has revised its full-year sales forecast upwards to between $98.80 billion and $99.80 billion, approximately $1 billion higher than the guidance provided in April. In addition, the company has also elevated its adjusted earnings outlook for 2023 to $10.70 to $10.80 per share from the previous estimate of $10.60 to $10.70 per share.

The medical devices business of Johnson & Johnson experienced robust growth, with sales rising 12.9% from the second quarter of 2022 to $7.79 billion. The company’s pharmaceutical division also saw positive trends, recording $13.73 billion in sales, a more than 3% year-over-year growth.

The consumer health segment of Johnson & Johnson generated $4.01 billion in sales for the quarter, marking a 5.4% increase from the same period a year ago. Despite these favorable financial outcomes, Johnson & Johnson continues to grapple with legal issues surrounding its talc-based products. In April, the company proposed to pay close to $9 billion to settle over 38,000 lawsuits. Moreover, a recent ruling required Johnson & Johnson to pay $18.8 million to a man who claimed that exposure to its baby powder caused him to develop cancer.

New Spin Off Strategy Declared

Today, Johnson & Johnson announced an exchange offer allowing its shareholders to opt for shares in Kenvue, its newly listed consumer health unit. Johnson & Johnson, holding an 89.6% stake in Kenvue, aims to divest at least 80.1% of the shares in this unit via the offering. This move is part of Johnson & Johnson’s strategy to spin off the consumer health division and focus more on its medical devices and pharmaceuticals businesses.

Johnson & Johnson disclosed that Goldman Sachs and J.P. Morgan Securities are serving as dealer managers for the offering.

Wall Street Adjust Price Targets Higher

Today, Raymond James analyst Jayson Bedford kept an Outperform and lifted his price target from $181 to $184.

Last week,

Credit Suisse analyst Trung Huynh has revised upward the price to $175 from $170.
JP Morgan analyst Michael Weinstein maintained a Neutral position yet raised the price target to $180 from $175.
Morgan Stanley analyst Terence Flynn reiterated an Equal-Weight and a $187 price target.

Analyst Steve Chesney (ATLANTIC EQUITIES) has currently the highest performing score on JNJ with 7/7 (100%) price target fulfillment ratio. His price targets carry on average an $1.83 (2.07%) potential upside. Johnson & Johnson stock price reaches these price targets on average within 63 days.

Schlumberger’s International Growth Outpaces North America

Schlumberger posted their Q2 2023 financial results, reporting earnings per share (EPS) of $0.72. This surpassed analyst expectations by $0.01, as the estimate was $0.71. Nevertheless, the oil-field services company’s revenue for the quarter, which came in at $8.1 billion, was slightly below the consensus estimate of $8.2 billion.

The reported Q2 EPS showed an increase of 44% compared to the same period a year earlier. Similarly, the company’s revenue rose 20% from the previous year. In a statement, CEO Olivier Le Peuch expressed optimism about the company’s international and offshore market growth, despite the more subdued outlook for North American drilling.

A closer look at SLB’s revenues shows that international markets are starting to outpace North American markets. According to Peter McNally, an analyst at Third Bridge, international revenues now account for nearly 80% of SLB’s total revenue. This represents a 21% growth in Q2 compared to the previous year, showing a widening gap with Halliburton, SLB’s main competitor.

For the quarter, Schlumberger reported a cash flow of $1.61 billion. The company predicts a stronger free cash flow for the second half of 2023 compared to the first half, setting the stage for a more robust annual free cash flow than the previous year.

Wall Street Analysts Adjust a Bit Higher

Susquehanna analyst Charles Minervino maintains a Positive outlook, increasing the price target from $65 to $68.
Raymond James analyst James Rollyson maintains an Outperform rating, raising the price target from $65 to $67.

Analyst Ian Macpherson (PIPER SANDLER) has currently the highest performing score on SLB with 3/4 (75%) price target fulfillment ratio. His price targets carry on average an $7.33 (24.23%)potential upside. Schlumberger’s stock price reaches these price targets on average within 105 days.

Autoliv Reports Larger-Than-Expected Q2 Profit Boost

Sweden’s Autoliv, the world’s largest airbag and seatbelt maker, reported a larger-than-expected increase in second-quarter adjusted profit as sales surged due to product launches and higher prices. Despite improvements, Autoliv’s CEO Mikael Bratt noted that the company is still experiencing higher call-off volatility than pre-pandemic levels.

Autoliv has faced abnormally high cost inflation in recent years, pressuring the company and other automotive industry suppliers to negotiate hard for price increases. CEO Bratt told Reuters that while he is pleased with the results and sees momentum building, demand has not yet met the company’s expectations.

In May, Autoliv revealed a cost-saving initiative to counteract high costs, including the elimination of 8,000 jobs and the closure of several sites in Europe. This step is expected to decrease costs by about $25 million in 2024, increase to around $55 million in 2025, and reach about $75 million upon full completion, according to the company’s statement.

Adjusted operating profit rose over 70% to $212 million in the quarter ending June 30, up from $124 million in the same period a year ago. This performance outperformed average Refinitiv analysts’ predictions of a $197 million profit. Brokerage Jefferies acknowledged Autoliv’s strong second quarter, which surpassed consensus estimates.

Autoliv reiterated its full-year outlook but anticipated that its adjusted operating margin would be back-end loaded for the second half of the year due to normal seasonality between the third and fourth quarters.

Analysts Update Price Targets Amid Continued Market Recovery

Baird analyst Luke Junk maintains a Neutral rating and raises his price target from $102 to $106.
Mizuho analyst Vijay Rakesh keeps a Buy rating and lifts his price target from $96 to $106.

Analyst Ryan Brinkman (JPMORGAN) has currently the highest performing score on ALV with 11/11 (100%) price target fulfillment ratio. His price targets carry on average an $12.6 (24.23%) potential upside. Autoliv stock price reaches these price targets on average within 494 days