Schaeffer's Trading Floor Blog

Earnings on Deck: JPMorgan Chase & Co., Yahoo! Inc., and Johnson & Johnson

Taking a closer look at JPM, YHOO, and JNJ ahead of their earnings reports

by 7/14/2014 1:53 PM
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Second-quarter earnings season kicks into high gear this week. Stepping into the confessional tomorrow are financial firm JPMorgan Chase & Co. (NYSE:JPM), Internet issue Yahoo! Inc. (NASDAQ:YHOO), and blue chip Johnson & Johnson (NYSE:JNJ). Here's a quick look at this trio of names as earnings approach.

  • JPM will report second-quarter earnings bright and early tomorrow morning. While the company has exceeded analysts' bottom-line estimates in five of the past eight quarters, the three misses have occurred in each of the most recent quarters. In the session subsequent to reporting, JPMorgan Chase & Co. has averaged a post-earnings gain of 0.2%, but tends to be flat going out one week. On the options front, the stock has racked up a 10-day call/put volume ratio of 2.32 at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the bullishly skewed 76th percentile of its annual range. In today's session, the stock is up 1.2% to trade at $56.46 following sector peer Citigroup Inc's (NYSE:C) earnings report.

  • YHOO has advanced more than 30% year-over-year to linger near $35.53, and if past is prologue, the stock could be poised to extend this momentum after the company reports earnings tomorrow night. Specifically, thanks to eight consecutive quarters of bottom-line wins, the equity has averaged a 1.5% gain in the subsequent three-day period after reporting. Additionally, a well-received report could prompt the eight remaining brokerage firms that maintain a tepid "hold" recommendation on the security to upwardly revise their ratings -- similar to what happened the last time Yahoo! Inc. stepped up to the earnings plate. For the company's second quarter, Wall Street is calling for a per-share profit of 38 cents -- a 3-cent improvement over the company's year-ago results.

  • No fewer than three analysts today raised their price targets for JNJ ahead of tomorrow morning's quarterly report. The most optimistic outlook came from Jefferies, which upped its target price by $4 to $114, citing strong sales of Johnson & Johnson's hepatitis C drug Olysio. However, the brokerage firm cautioned that this boost in revenue may be "short-lived," due to rising competition from Gilead Sciences, Inc. (NASDAQ:GILD) and AbbVie Inc (NYSE:ABBV). Historically speaking, JNJ has performed well on the earnings stage -- besting analysts' profit projections in each of the past eight quarters. In the three sessions following the results, the stock has averaged a gain of 1.3%. More bullish brokerage notes could be on the horizon, should the company report stronger-than-forecast second-quarter earnings, considering the consensus 12-month price target of $105.96 is just a chip-shot away from JNJ's current price of $105.32.

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