Is August a good month for buying Johnson & Johnson shares?

Johnson & Johnson (NYSE: JNJ) shares have advanced almost 5% since the beginning of July 2021; the company reported better than expected second-quarter results this Wednesday and expects even better trends in the third quarter.

Fundamental analysis: Johnson & Johnson raised its outlook for the fiscal 2021 year

The company’s business has proven improvements throughout the second quarter of 2021, and the company reported better than expected results this week. Total revenue has increased by 27.1% Y/Y to $23.31 billion, while the GAAP EPS was $2.35 for the second fiscal quarter (beats by $0.31).

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It is important to mention that operational sales increased by 23%, and the net earnings for the second quarter were $6.3 billion. Consumer health sales totaled $3.7 billion and increased 9.2%, pharmaceutical sales of $12.6 billion grew 13.6%, and medical devices sales of $7 billion grew 57.2%.

Johnson & Johnson reported that the company’s single-shot COVID-19 vaccine generated $164 million in sales during the second quarter, but COVID-19 vaccine revenue should grow in the third quarter.

“We continue to be poised for further growth and value creation not just in 2021, but more importantly for 2022 and beyond. As we enter the back half of the year, we are well-positioned to continue to deploy capital in a strategic, value-creating way that will benefit stakeholders over the long term,” said Joseph Wolk, Executive Vice President and Chief Financial Officer.

Total revenue has increased above expectations (+ $770 million), and the company raised its outlook for the fiscal 2021 year. Johnson & Johnson expects revenue in the range between $92.5 billion -$93.3 billion, while the EPS should be in the range of $9.50 to $9.60.

Johnson & Johnson distributed $2.8 billion to shareholders during the second quarter and ended it with $25 billion of cash in marketable securities and approximately $33 billion of debt. The consensus Wall Street rating on Johnson & Johnson remains bullish, but probably it is not the best moment to invest in shares of this company.

Johnson & Johnson trades at more than fourteen times TTM EBITDA, the book value per share is around $30, and the current dividend yield is around 2.4%. If we compare the total stockholders’ equity of $65.83 billion and the market capitalization of $447 billion, we can notice that this stock is not undervalued, and the current risk/reward ratio is not good enough for “value” investors.

Technical analysis: Johnson & Johnson shares are trading near their record levels

Johnson & Johnson shares are trading near their record levels, and according to technical analysis, there is no risk of a positive trend reversal for now.

Rising above $175 supports the continuation of the bullish trend, and the next price target could be located around $180. On the other side, if the price falls below $160, it would be a “sell” signal, and we have the open way to $150.

Summary

Johnson & Johnson reported better than expected second-quarter results this Wednesday and raised its outlook for the fiscal 2021 year. Johnson & Johnson shares are trading near their record levels, and according to technical analysis, there is no risk of a positive trend reversal for now.

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