The Zacks Analyst Blog Highlights: Johnson & Johnson, Statoil ASA, Eni SpA, Total S.A. and Hess Corporation

Thu Jul 14, 2011 9:30am EDT

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The Zacks Analyst Blog Highlights: Johnson & Johnson, Statoil ASA, Eni SpA, Total S.A. and Hess Corporation

PR Newswire

CHICAGO, July 14, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Johnson & Johnson (NYSE: JNJ), Statoil ASA (NYSE: STO), Eni SpA (NYSE: E), Total S.A. (NYSE: TOT) and Hess Corporation (NYSE: HES).

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Here are highlights from Wednesday's Analyst Blog:

Earnings Preview: Johnson & Johnson

Johnson & Johnson (NYSE: JNJ) is slated to report its second quarter 2011 earnings on July 19, 2011. The current Zacks Consensus Estimate for the second quarter is $1.24 per share, representing a year-over-year decline of 2.48%.

Johnson & Johnson has surpassed earnings estimates in two of the last four quarters and reported in line with the Zacks Consensus Estimate in the other two quarters (with a trailing four-quarter average of 7.48%).

First Quarter Recap

Johnson & Johnson posted first-quarter 2011 earnings (excluding special items) of $1.35 per share, $0.10 above the Zacks Consensus Estimate and 4.7% above the year-ago earnings of $1.29. The company beat expectations despite being hampered by product recalls.

Johnson & Johnson's revenues for the reported quarter increased 3.5% year-over-year to $16.2 billion. Revenues exceeded the Zacks Consensus Estimate of $15.8 billion. Operational factors and foreign exchange movement favorably impacted sales by 1.8% and 1.7%, respectively. Incremental rebates under the US healthcare reform impacted first quarter revenues by about $60 million. A similar impact was felt due to European austerity measures.

(Read our full coverage of the first quarter 2011 earnings report at J&J Beats, Raises Outlook )

Agreement of Analysts

Estimate revisions for Johnson & Johnson have been scarce over the past month. Over the past 30 days, only 3 of the 17 analysts covering the stock for the second quarter of 2011 have revised their estimates. All 3 analysts have slashed their earnings estimates. 2011 estimates have been revised downward over the last 30 days by only 3 analysts with no upward movements.

We note that estimates were revised upwards by some analysts covering the stock following the improved outlook provided by the company while releasing the first quarter results. As the estimates have already been revised, the stock has not seen significant revisions thereafter.

Magnitude of Estimate Revisions

The earnings estimate for the second quarter of 2011 has remained static over the last 30 days due to the lack of significant estimate revisions by the analysts following the stock. 2011 earnings estimate has also witnessed marginal revision, going down by only $0.01 to $4.95 over the last 30 days.

Neutral on Johnson & Johnson

We currently have a Neutral recommendation on Johnson & Johnson. The stock carries a Zacks #3 Rank (short-term Hold rating). Even though Johnson & Johnson has been facing challenges in the form of over-the-counter (OTC) product recalls, pricing austerity in the European Union and generic competition, we believe that the company's diversified business model, lack of cyclicality and strong financial position will help it in tough situations.

                                      Statoil to Expand Arctic LNG Plant

Statoil ASA (NYSE: STO) is mulling over expanding production at its Snoehvit liquefied natural gas (LNG) plant in the Arctic.

The expansion would include the second processing train in 2018 to treat gas from recent discoveries in the Barents Sea.

Statoil's plant, which treats gas from the offshore Snoehvit field, is situated on Melkoeya Island in Europe's northernmost tip. It enjoys a monopoly in Europe as it is the only LNG processing plant over there.

The plant processes gas from the offshore Snoehvit field after which it is shipped by LNG tankers to the end consumers. The plant has an average annual output of approximately 5.76 billion cubic meters, all of which is exported.

Statoil is in the conceptualization stage and expects to put forward a proposal by the fourth quarter of 2012. The investment decision based on the concept report would be made by the fourth quarter of 2013. Thereafter, production is slated to commence in late 2018, if the company moves ahead with the consent of all parties concerned.

The processing capability of the new train could not be judged so early. However, the expanded facility would process volumes from the north of the Snoehvit field in addition to Statoil's Tornerose prospect and the Eni SpA (NYSE: E)-operated Goliat field.

Several drilling expeditions have occurred at the Barents Sea since 1980. But only three major discoveries have been made out of more than 80 exploration wells. The discoveries worthy of mention are Snoehvit, Goliat and Skrugard.

Statoil, Total S.A. (NYSE: TOT), GDF Suez, Hess Corporation (NYSE: HES), RWE Dea and Norwegian-state owned firm Petoro are partners in the Snoehvit field with interests of 33.53%, 18.40%, 12%, 3.26%, 2.81% and 30%, respectively. The field started operations in 2007.

Statoil has a Zacks #3 Rank, which translates into a Hold rating for a period of one to three months. Over the long term, we are Neutral on the stock and expect it to perform in line with the broader market indices.

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