Johnson & Johnson's (JNJ) first-quarter earnings will show the impact of the Actelion acquisition, which is expected to improve J&J's outlook, especially in its slowing pharma business.
"We expect positive earnings momentum as consensus starts to update models for this transaction, which should also address some of the specific concerns that investors have recently focused on regarding slowing growth of the Pharma business," Jefferies analyst Dr. Jeffrey Holford wrote in an investor note, previewing earnings. "As a result of our update, we now forecast c10% EPS growth on average (from 8%), between 2018E-21E and our EPS estimates are now up to 19% ahead of consensus in the mid term."
Investors will also be looking to hear what J&J has to say about its Consumer business, which may weigh on revenue growth in the quarter.
Analysts surveyed by Yahoo! Finance expect the company to earn $1.77 a share on $18.03 billion in revenue for the period.
Over the past 12 months, shares of J&J have gained nearly 13% excluding dividends, compared to the near 11% gain in the S&P 500.
Here are five ETFs that may benefit if investors like Johnson & Johnson's first-quarter results.
Health Care Select Sector SPDR Fund
The $15.87 billion Health Care Select Sector SPDR Fund (XLV) has J&J make up 11.42% of its portfolio, charging investors an expense ratio of 0.15%.
Jefferies's Holford, who has a $140 price target on shares, noted that the first-quarter is expected to see slow-growth, but it will pick up in the second half of the year.
"The combination of tough prior year Pharma comps, as well as potential further inventory draw downs in the Consumer business, likely make for slower growth in Q1'1," Holford wrote. "However, H2 comps are much easier and also benefit from the initial EPS accretion from Actelion, which is expected to ramp significantly into 2018, as well as the acquisition of AMO."
iShares U.S. Healthcare ETF
The $1.85 billion iShares U.S. Healthcare ETF (IYH) has J&J make up 10.93% of its portfolio, charging investors an expense ratio of 0.43%.
Wells Fargo analyst Larry Biegelsen expects to hear more updates on the company's Remicade business, due in part to biosimilars launched recently, noting that competition "has been muted thus far."
Biegelsen has a market perform and a price target range between $139 and $141 on J&J shares.
VanEck Vectors Pharmaceutical ETF
The $333.4 million VanEck Vectors Pharmaceutical ETF (PPH) has J&J make up 10.27% of its portfolio, charging investors an expense ratio of 0.35%.
Jefferson Research said that J&J's strong earnings and cash flow qualities make it worth buying.
"Operating Efficiency and Balance Sheet Quality, and Valuation suggests a lower amount of price risk," the research firm wrote. "When combined, JNJ deserves a BUY rating."
Vanguard Health Care ETF
The $6.02 billion Vanguard Health Care ETF (VHT) has J&J make up 10.22% of its portfolio, charging investors an expense ratio of 0.10%.
Wells Fargo's Biegelsen added that even with the Actelion acquisition, J&J isn't likely to alter its 2017 earnings guidance, at least not this quarter, but updates could be coming later this year, at its R&D investor day next month.
FIDELITY MSCI HEALTH CARE INDEX ETF
The $686.9 million FIDELITY MSCI HEALTH CARE INDEX ETF (FHLC) has J&J make up 9.84% of its portfolio, charging investors an expense ratio of 0.08%.