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Tickers in this Article: JNJ, BSX, ABT, BAX
The healthcare sector has traditionally been viewed as a relatively recession-proof area of the stock market. The direction that some stocks in this space have taken over the past year may lead some investors to believe otherwise. As Q3 earnings begin to come out, we will be able to gain more visibility into how recession-resistant some of these companies actually are. Here are three companies set to report their earnings in the coming days that should post fundamentally sound results in light of the current economic backdrop.

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Taking the Pulse
On Tuesday, Johnson & Johnson (NYSE:JNJ) is slated to report its Q3 results, which are expected to come in slightly below its year-ago quarter. Analysts are looking for EPS to decrease 3.4% on a 4.6% decline in sales. A diverse portfolio of business segments has so far enabled the company to overcome patent expirations, which have weighed on J&J's domestic pharmaceutical business in recent quarters.

In Q2, the company's U.S. consumer and medical device divisions experienced slight upticks in sales. International sales across the board were driven lower due to a negative currency impact. In late September, J&J was able to reach a favorable settlement with Boston Scientific (NYSE:BSX) to resolve litigation pertaining to stent patents. The agreement will net J&J $716.3 million.

Johnson & Johnson's earnings will be followed by Abbott Laboratories (NYSE:ABT), as the pharmaceutical and diagnostic company reports its Q3 results before the market opens on Wednesday. Analysts are expecting Abbott to check in with a 13.9% rise in EPS on a 2.9% improvement in sales compared to the company's results from the prior year.


Year to date, Abbott shares have actually fallen 5.4%. To offset this decline, the stock holds promising long-term prospects for steady growth and wields a healthy dividend, which was recently increased by 11% and now yields 3.2%. At the close of the company's Q2, management confirmed that it expects double-digit full year EPS growth in 2009.

Knocking Back H1N1
On Thursday, Baxter International (NYSE:BAX) will announce its Q3 earnings, which are expected to rise by 10.2% over the company's year-ago quarter. Analysts are expecting sales to be flat when compared to the same period last year. Baxter has topped Wall Street's consensus in each of its last four quarters and I would not be surprised by a slight beat this time around either. (For more on analyst expectations, be sure to read Analyst Forecasts Spell Disaster For Some Stocks.)

The company has been at the forefront in the battle against the swine flu. On Wednesday, Baxter received approval from the European Commission to market a vaccine designed to combat H1N1. Initial quantities of the vaccine have already been shipped to the United Kingdom and Ireland for use in their national vaccination programs.

The Bottom Line
J&J, Abbott and Baxter should each post Q3 results that are above or just below their results from a year ago. These companies have been able to persevere in a tough environment by relying on innovation and diverse product portfolios. Investors can expect each one of these companies to be consistent performers not only in Q3, but also for some time to come.

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