Diamonds and Dogs

7/17/18

Johnson & Johnson (JNJ) rebounding following earnings. The world's largest healthcare company is up nearly 4% after beating earnings estimates as sales rose 10% to $20.8 billion. The company issued in-line guidance for the full year. JNJ's stock has been under pressure of late due to a recent court ruling declaring they must pay nearly $4.7 billion in damages related to allegations that asbestos in J&J's talcum (baby) powder caused ovarian cancer. JNJ will obviously fight these claims and particularly the dollar amount.

Netflix (NFLX) coming back to earth. After rallying 100% year to date, the stock is taking a hit down 9% following earnings. The company actually beat earnings estimates as sales rose 40% to $3.91 billion. However the company lowered third quarter earnings, sales and global net subscribers to 5.0m vs. estimates of 5.6M. The company is also forecasting negative $3 to $4 billion in free cash flow due to content spending of around $12 billion for the year. If Netflix's stock keeps going lower, it will be tough for the company to keeping spending more than they make. We'll see.