Johnson & Johnson Stock Is Soaring Because Earnings Beat, Raised Guidance
Johnson & Johnson topped earnings estimates and raised guidance.
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Johnson & Johnson
reported earnings early Tuesday that beat analyst estimates, sending shares soaring.
Johnson & Johnson
(ticker: JNJ) reported sales of $23.3 billion for the third quarter, up 10.7% from the same quarter last year. Adjusted earnings were $2.60 per share, up 18.2% from a year ago.
Analysts had expected slightly higher sales of $23.6 billion, according to FactSet, but lower earnings of $2.35 per share.
The company also increased its guidance for fiscal 2022, saying it now expects adjusted earnings per share in the range from $9.77 to $9.82, up from its previous range from $9.60 to $9.70.
The new guidance is above the FactSet analyst consensus EPS estimate for $9.71 per share.
Johnson & Johnson stock was up 1.8% to $162.93 in Tuesday morning trading.
“The EPS beat was driven by robust above-market results in Pharmaceuticals, ongoing recovery in Medical Devices, and strong growth in Consumer Health,” wrote Cantor Fitzgerald analyst Louise Chen in a note out early Tuesday. Chen rates Johnson & Johnson stock at Overweight with a $215 price target.
“Positive investor sentiment should continue to build with the EPS beat & solid operational-growth performance,” Cowen analyst Joshua Jennings wrote in a note out Tuesday. Jennings rates Johnson & Johnson stock at Outperform with a $195 price target.
The news comes as Johnson & Johnson awaits the decision of the Food and Drug Administration on whether to authorize a booster of its Covid-19 vaccine. Meetings of the FDA’s vaccines advisory committee went poorly for Johnson & Johnson last week, as advisors seemed to conclude that the vaccine, which the company had touted as a one-and-done shot, likely always should have been a two-dose vaccine.
That could undermine the vaccine’s market position as a more-convenient alternative to hard-to-reach populations. What’s more, the advisors signaled eagerness for the agency to approve mix-and-match boosting, allowing people who received one firm’s vaccine to get a boost of another vaccine. That would favor the vaccine from Johnson & Johnson competitor
(PFE), SVB Leerink analyst Dr. Geoffrey Porges wrote Friday.
The fate of the company’s vaccine, however, is not material to its near-term earnings, as the company is selling the vaccine on a not-for-profit basis. Aside from the vaccine, the news from Johnson & Johnson this week has been good.
The company reported that sales of its pharmaceutical division were $13 billion for the quarter, up 13.8% on a reported basis from the same quarter last year. That included $502 million in sales of the Covid-19 vaccine.
Johnson & Johnson attributed the growth in pharmaceutical sales to its cancer treatment Darzalex, its inflammatory-disease treatment Stelara, its psoriasis drug Tremfaya, and other medications. Growth in those drugs had been offset by drops in sales of Remicade, which treats inflammatory diseases, and Invokana, a diabetes drug.
Sales in the company’s medical-devices division were $6.6 billion for the quarter, up 8% since last year on an operational basis. Medical-device sales plunged during the pandemic, to $23 billion in 2020 from $26 billion in 2019, as patients and hospitals cancelled surgeries amid a flood of Covid-19 cases.
Medical-device sales are now up from the third quarter of 2020, when they were $6.2 billion, and from the third quarter of 2019, when they were $6.4 billion.
Consumer-health sales, meanwhile, were $3.7 billion, up from $3.5 billion in 2020.
“In the face of evolving marketplace dynamics resulting from the effects of Covid-19 and other global trends, we have continued to demonstrate the responsiveness and agility required to meet the needs of our stakeholders, while also successfully investing in a pipeline of innovation and key commercial platforms to drive our future growth,” said Johnson & Johnson Chairman and CEO Alex Gorsky in a statement. Gorsky is stepping down as CEO in January, in favor of Joaquin Duato, currently the vice chairman of the company’s executive committee.
Write to Josh Nathan-Kazis at [email protected]