Johnson & Johnson Provides Justification To Stay On The Sidelines

According to Goldman Sachs, Johnson & Johnson (NYSE: JNJ) was highlighted with risk as it headed into it's 2Q due to $0.11 below consensus rating and potential management guidance reduction for 2010 due to cost-restructuring challenges. Goldman has maintained Johnson & Johnson at "neutral".

The key risks involved are (a) pharma pipeline delays, (b) collateral brand damage due to Consumer recall, and (c) EU pricing pressures. The upside risks are (a) pipeline approvals, and (b) cost restructuring benefits.

Goldman says Abbott Laboratories (NYSE: ABT) is the preferred diversified pharma company, expected to have higher quality 2Q earnings, lesser risk in reducing 2010 guidance, and a discounted 2011 PEG due to superior EPS growth.

Stock prices yesterday quoted at $58.58.