Johnson & Johnson Inc. (NYSE:JNJ) will report earnings for the fourth quarter on January 23rd. It looks like it will be able to meet expectations but I don't think it will raise guidance.

JNJ is 230 separate companies in fields ranging from bandages to pharmaceuticals. With $52 billion in sales and $11 billion in profits, it's best known for its corporate citizenship. As I noted in Value Leadership, JNJ put its credo to the test in 1982 when seven people died in Chicago after ingesting cyanide-laced Tylenol. JNJ immediately pulled all the bottles from stores around the country and reintroduced the product with tamper-proof seals six weeks later. The decision to pull the 31 million bottles at a cost of $100 million was made by managers without consulting the CEO, who was unreachable in an airplane at the time.

Eighteen analysts who cover JNJ expect it to earn 80 cents a share in the fourth quarter and $3.74 for the full year 2006. These estimates are 8.9% and 6.9% higher, respectively, than during the same period in 2005. According to Forbes, The Goldman Sachs Group (NYSE: GS) believes that JNJ is likely to be able to weather the storm that will take place in mid-2007 due to a Medicare Drug Benefit anniversary which is anticipated to dampen volume growth. Goldman believes that with its June 2006 $16.6 billion acquisition of Pfizer Inc.'s (NYSE: PFE) Consumer Healthcare business -- which features strong brands such as Listerine and Nicorette -- JNJ will suffer less than pure-play pharmaceutical companies.

But at a P/E of 18, JNJ is trading 2.7 times higher than its forecast earnings growth rate of 6.7%. An earnings miss or tepid guidance could poison JNJ stock. Will JNJ miss-and-lower, meet-and-maintain, or beat-and-raise?

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, a Professor of Management at Babson College, and editor of The Cohan Letter. He has no financial interest in Goldman Sachs, Johnson & Johnson. or Pfizer securities.

Also check out some other earnings reports that we're following, and let us know your thoughts on earnings expectations.

Citigroup Inc. (NYSE:C) could have a tough time beating expectations when it reports earnings on January 19. Specifically, 14 analysts surveyed by Zacks expect C to report earnings per share (EPS) of $1.06 for the fourth quarter of 2006 with a "whisper number" of $1.09. For all of 2006, analysts expect C to earn $4.26, and $4.55 for 2007, a 6.8% increase.

As I noted last year, we are in a beat-and-raise market. This means that if a company aspires to a rising stock price, it must beat analysts' EPS expectations each quarter and raise its future earnings guidance. For companies that are widely followed by analysts, it is particularly difficult to beat and raise because analysts are paid significant sums to set accurate expectations. Citigroup is widely covered, so it's hard for it to win.

C's stock price has risen 10.5% in the last year to $54 -- 5% below the all-time high it hit last month. And its $90.8 billion in revenues and $21 billion in net income have grown 19.4% and 6.4%, respectively, in the last 12 months. C trades at a price/earnings (P/E) multiple on 2007 earnings of 11.9 -- 177% of its anticipated 6.8% earnings growth -- not a good sign -- particularly considering that its EPS grew almost twice as fast -- 11.6% -- in 2006.

I'm a bit concerned about whether Citigroup will make its numbers since it announced last week that it was taking a seven cents a share charge to restructure its Japanese consumer finance operation. But analysts may have already factored that in to their expectations.

On January 18, we'll see whether C will beat-and-raise, meet-and-maintain, or miss-and-lower. What do you think will happen?

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, a Professor of Management at Babson College, and editor of The Cohan Letter. He owns Citigroup shares.

Also check out some other earnings reports that we're following, and let us know your thoughts on earnings expectations.