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Johnson & Johnson’s (JNJ - Free Report) second-quarter 2023 earnings came in at $2.80 per share, which beat the Zacks Consensus Estimate of $2.61. Earnings rose 8.1% from the year-ago period.
Adjusted earnings exclude intangible amortization and some other special items. Including these items, J&J reported second-quarter earnings of $1.96 per share, up 8.9% from the year-ago quarter.
Sales of this drug and consumer products giant came in at $25.53 billion, beating the Zacks Consensus Estimate of $24.68 billion. Sales rose 6.3% from the year-ago quarter, reflecting an operational increase of 7.5%, which was offset by a negative currency impact of 1.2%.
Organically, excluding the impact of acquisitions and divestitures, sales rose 6.2% on an operational basis compared with a 7.6% increase in the previous quarter.
Second-quarter sales in the domestic market rose 10.2% to $13.44 billion. International sales rose 2.2% on a reported basis to $12.09 billion, reflecting an operational increase of 4.7%, which was offset by a negative currency impact of 2.5%. Excluding the impact of all acquisitions and divestitures, on an adjusted operational basis, international sales rose 4.4% in the quarter.
Segment Details
Pharmaceutical segment sales rose 3.1% year over year to $13.73 billion, reflecting a 3.8% operational increase and a 0.7% negative currency impact. Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 3.9%. Pharmaceutical segment sales beat the Zacks Consensus Estimate of $13.2 billion as well as our model estimate of $13.04 billion.
Higher sales of key products such as Darzalex, Stelara, Tremfya and Erleada drove the segment’s growth. New drugs like Carvykti and Spravato also contributed to growth. The sales growth was dampened by lower sales of Imbruvica and generic/biosimilar competition to drugs like Zytiga and Remicade.
Darzalex sales rose 22.4% year over year to $2.43 billion in the quarter. Sales, however, missed the Zacks Consensus Estimate of $2.46 billion and our model estimate is $2.49 billion. Stelara sales grew 7.6% to $2.8 billion in the quarter. Stelara sales beat the Zacks Consensus Estimate as well as our model estimate of $2.71 billion.
Imbruvica sales declined 13.2% to $841.0 million. Rising competitive pressure in the United States due to new oral competition has been hurting sales of Imbruvica for the past few quarters. Imbruvica sales were however better than the Zacks Consensus Estimate of $824.0 million and our estimate of $812.0 million.
Erleada generated sales of $567 million in the quarter, up 25.9% year over year. Erleada sales, however, missed the Zacks Consensus Estimate of $595.0 million and our model estimate of $594.0 million. Tremfya recorded sales of $706 million in the quarter, up 18.3% year over year. However, Tremfya missed the Zacks Consensus Estimate of $761 million as well as our model estimate of $803.7 million.
New drug, Carvykti, a BCMA CAR-T therapy approved for relapsed or refractory multiple myeloma, recorded sales of $117 million compared with $72 million in the previous quarter. New drug, Spravato, approved for treatment-resistant depression, recorded sales of $169.0 million, compared with $131 million in the previous quarter.
PAH revenues of $972 million rose 15.3% year over year. Xarelto sales rose 4.7% in the quarter to $637 million.
Invega Sustenna/Xeplion/Invega Trinza/Trevicta sales declined 2.1% to $1.03 billion in the quarter. Simponi/Simponi Aria sales declined 6.6% to $529.0 million, while Prezista sales rose 5.8% to $491 million.
Zytiga sales declined 55.1% to $227.0 million in the quarter due to generic competition. Sales of Remicade were down 28.6% in the quarter to $462 million.
J&J’s single-dose COVID-19 vaccine generated sales of $285 million in the quarter, down 47.7% year over year. International sales accounted for all COVID-19 vaccine sales.
MedTech segment sales came in at $7.79 billion, up 12.9% from the year-ago period, as an operational increase of 14.7% was offset by a negative currency movement of 1.8%. MedTech segment sales beat the Zacks Consensus Estimate of $7.50 billion as well as our model estimate of $7.56 billion.
Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 9.9%. Abiomed, acquired last year, contributed 4.8% of sales growth.
Sales in the MedTech segment are being driven by a recovery in surgical procedures, better commercial execution and new product launches.
The Consumer Health segment recorded revenues of $4.01 billion in the reported quarter, up 5.4% year over year, reflecting an 7.7% operational increase and a 2.3% negative currency impact. Consumer Health segment sales came ahead of the Zacks Consensus Estimate of $3.95 billion and our estimate of $4.0 million.
Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 7.7% worldwide, driven by over-the-counter products.
In May 2023, J&J spun off its Consumer Health segment into a new publicly-traded company. This newly listed company, called Kenvue, began trading on the New York Stock Exchange under the ticker symbol “KVUE” with effect from May 4. The company intends to "split off" the shares of Kenvue that it currently holds through an exchange offer as the form of its next step in the separation. With the complete separation of the Consumer Health segment, J&J will become a two-sector company focused on Pharmaceutical and MedTech fields.
Raised 2023 Guidance
The company raised its previously issued financial guidance for 2023.
J&J raised its revenue guidance to a range of $98.8 billion to $99.8 billion from $97.9 billion to $98.9 billion. This guidance excludes any revenues from J&J’s COVID-19 vaccine. The Zacks Consensus Estimate is pegged at $98.9 billion. Revenue growth is now expected in the range of 6.5%-7.5% versus the prior expectation of 5.5%-6.5%
Excluding the COVID-19 vaccine, operational constant-currency sales are expected to increase in the range of 7.0%-8.0% versus the prior expectation of 5.5%-6.5%. Adjusted operational sales (excluding currency impact, acquisitions/divestitures) growth is now expected to be 6.0%-7.0% (prior expectation of 4.5%-5.5%).
The adjusted earnings per share guidance was raised from a range of $10.60-$10.70 to $10.70 -$10.80. The Zacks Consensus Estimate is pegged at $10.65 per share.
The earnings range indicates an increase of 5.5%-6.5% versus the prior expectation of 4.5%-5.5%. On an operational, constant-currency basis, adjusted earnings per share are expected to increase 4.5%-5.5% versus the prior expectation of 3.5%-4.5%.
Our Take
J&J reported strong second-quarter results, beating estimates for earnings as well as sales. The MedTech and Pharmaceuticals segments outperformed expectations. The company’s strong performance in the first half of the year led it to raise its financial guidance for the second time this year.
J&J’s shares were up around 1.4% in pre-market trading in response to the upbeat results and guidance increase. This year so far, J&J’s shares have declined 10.1% compared with the industry’s 0.6% decrease.
Image Source: Zacks Investment Research
J&J’s Pharma unit is performing at above-market levels, supported by blockbuster drugs like Darzalex and Stelara, and contributions from newer drugs. J&J is focusing on growing its MedTech unit through new products. However, macroeconomic headwinds like inflationary pressure and rising input costs are hurting margins. Stelara’s upcoming loss of exclusivity in late 2023 is a concern. J&J has taken meaningful steps to resolve its talc and opioid litigation. However, the talc issues continue to remain a concern for investors.
In the past 60 days, estimates for Erasca’s 2023 loss per share have narrowed from $1.34 to $1.29. In the same period, the loss per share estimate for 2024 has improved from $1.71 to $1.54. Shares of Erasca have declined 37.2% in the year-to-date period.
Earnings of Erasca beat estimates in each of the last four quarters, witnessing an earnings surprise of 12.89%, on average. In the last reported quarter, Erasca’s earnings beat estimates by 26.67%.
In the past 60 days, estimates for Omega Therapeutics’ 2023 loss per share have narrowed from $2.18 to $2.05. During the same period, the loss estimates per share for 2024 have improved from $2.22 to $2.01. In the year so far, shares of Omega Therapeutics have lost 9%.
Earnings of Omega Therapeutics beat estimates in two of the last four quarters, missed the mark on one occasion while meeting the mark on another. On average, the company witnessed an earnings surprise of 8.24%. In the last reported quarter, Omega Therapeutics’ earnings beat estimates by 21.88%.
In the past 60 days, estimates for Alkermes’ 2023 earnings per share have risen from 20 cents to $1.02. During the same period, the earnings per share for 2024 have risen from $1.73 to $2.08. Year to date, shares of Alkermes have risen 21.4%.
Earnings of Alkermes beat estimates in each of the last four quarters, witnessing an earnings surprise of 90.83%, on average. In the last reported quarter, Alkermes’ earnings beat estimates by 133.33%.
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J&J (JNJ) Q2 Earnings & Sales Top, '23 View Upped, Stock Jumps
Johnson & Johnson’s (JNJ - Free Report) second-quarter 2023 earnings came in at $2.80 per share, which beat the Zacks Consensus Estimate of $2.61. Earnings rose 8.1% from the year-ago period.
Adjusted earnings exclude intangible amortization and some other special items. Including these items, J&J reported second-quarter earnings of $1.96 per share, up 8.9% from the year-ago quarter.
Sales of this drug and consumer products giant came in at $25.53 billion, beating the Zacks Consensus Estimate of $24.68 billion. Sales rose 6.3% from the year-ago quarter, reflecting an operational increase of 7.5%, which was offset by a negative currency impact of 1.2%.
Organically, excluding the impact of acquisitions and divestitures, sales rose 6.2% on an operational basis compared with a 7.6% increase in the previous quarter.
Second-quarter sales in the domestic market rose 10.2% to $13.44 billion. International sales rose 2.2% on a reported basis to $12.09 billion, reflecting an operational increase of 4.7%, which was offset by a negative currency impact of 2.5%. Excluding the impact of all acquisitions and divestitures, on an adjusted operational basis, international sales rose 4.4% in the quarter.
Segment Details
Pharmaceutical segment sales rose 3.1% year over year to $13.73 billion, reflecting a 3.8% operational increase and a 0.7% negative currency impact. Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 3.9%. Pharmaceutical segment sales beat the Zacks Consensus Estimate of $13.2 billion as well as our model estimate of $13.04 billion.
Higher sales of key products such as Darzalex, Stelara, Tremfya and Erleada drove the segment’s growth. New drugs like Carvykti and Spravato also contributed to growth. The sales growth was dampened by lower sales of Imbruvica and generic/biosimilar competition to drugs like Zytiga and Remicade.
Darzalex sales rose 22.4% year over year to $2.43 billion in the quarter. Sales, however, missed the Zacks Consensus Estimate of $2.46 billion and our model estimate is $2.49 billion. Stelara sales grew 7.6% to $2.8 billion in the quarter. Stelara sales beat the Zacks Consensus Estimate as well as our model estimate of $2.71 billion.
Imbruvica sales declined 13.2% to $841.0 million. Rising competitive pressure in the United States due to new oral competition has been hurting sales of Imbruvica for the past few quarters. Imbruvica sales were however better than the Zacks Consensus Estimate of $824.0 million and our estimate of $812.0 million.
Erleada generated sales of $567 million in the quarter, up 25.9% year over year. Erleada sales, however, missed the Zacks Consensus Estimate of $595.0 million and our model estimate of $594.0 million. Tremfya recorded sales of $706 million in the quarter, up 18.3% year over year. However, Tremfya missed the Zacks Consensus Estimate of $761 million as well as our model estimate of $803.7 million.
New drug, Carvykti, a BCMA CAR-T therapy approved for relapsed or refractory multiple myeloma, recorded sales of $117 million compared with $72 million in the previous quarter. New drug, Spravato, approved for treatment-resistant depression, recorded sales of $169.0 million, compared with $131 million in the previous quarter.
PAH revenues of $972 million rose 15.3% year over year. Xarelto sales rose 4.7% in the quarter to $637 million.
Invega Sustenna/Xeplion/Invega Trinza/Trevicta sales declined 2.1% to $1.03 billion in the quarter. Simponi/Simponi Aria sales declined 6.6% to $529.0 million, while Prezista sales rose 5.8% to $491 million.
Zytiga sales declined 55.1% to $227.0 million in the quarter due to generic competition. Sales of Remicade were down 28.6% in the quarter to $462 million.
J&J’s single-dose COVID-19 vaccine generated sales of $285 million in the quarter, down 47.7% year over year. International sales accounted for all COVID-19 vaccine sales.
MedTech segment sales came in at $7.79 billion, up 12.9% from the year-ago period, as an operational increase of 14.7% was offset by a negative currency movement of 1.8%. MedTech segment sales beat the Zacks Consensus Estimate of $7.50 billion as well as our model estimate of $7.56 billion.
Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 9.9%. Abiomed, acquired last year, contributed 4.8% of sales growth.
Sales in the MedTech segment are being driven by a recovery in surgical procedures, better commercial execution and new product launches.
The Consumer Health segment recorded revenues of $4.01 billion in the reported quarter, up 5.4% year over year, reflecting an 7.7% operational increase and a 2.3% negative currency impact. Consumer Health segment sales came ahead of the Zacks Consensus Estimate of $3.95 billion and our estimate of $4.0 million.
Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 7.7% worldwide, driven by over-the-counter products.
In May 2023, J&J spun off its Consumer Health segment into a new publicly-traded company. This newly listed company, called Kenvue, began trading on the New York Stock Exchange under the ticker symbol “KVUE” with effect from May 4. The company intends to "split off" the shares of Kenvue that it currently holds through an exchange offer as the form of its next step in the separation. With the complete separation of the Consumer Health segment, J&J will become a two-sector company focused on Pharmaceutical and MedTech fields.
Raised 2023 Guidance
The company raised its previously issued financial guidance for 2023.
J&J raised its revenue guidance to a range of $98.8 billion to $99.8 billion from $97.9 billion to $98.9 billion. This guidance excludes any revenues from J&J’s COVID-19 vaccine. The Zacks Consensus Estimate is pegged at $98.9 billion. Revenue growth is now expected in the range of 6.5%-7.5% versus the prior expectation of 5.5%-6.5%
Excluding the COVID-19 vaccine, operational constant-currency sales are expected to increase in the range of 7.0%-8.0% versus the prior expectation of 5.5%-6.5%. Adjusted operational sales (excluding currency impact, acquisitions/divestitures) growth is now expected to be 6.0%-7.0% (prior expectation of 4.5%-5.5%).
The adjusted earnings per share guidance was raised from a range of $10.60-$10.70 to $10.70 -$10.80. The Zacks Consensus Estimate is pegged at $10.65 per share.
The earnings range indicates an increase of 5.5%-6.5% versus the prior expectation of 4.5%-5.5%. On an operational, constant-currency basis, adjusted earnings per share are expected to increase 4.5%-5.5% versus the prior expectation of 3.5%-4.5%.
Our Take
J&J reported strong second-quarter results, beating estimates for earnings as well as sales. The MedTech and Pharmaceuticals segments outperformed expectations. The company’s strong performance in the first half of the year led it to raise its financial guidance for the second time this year.
J&J’s shares were up around 1.4% in pre-market trading in response to the upbeat results and guidance increase. This year so far, J&J’s shares have declined 10.1% compared with the industry’s 0.6% decrease.
Image Source: Zacks Investment Research
J&J’s Pharma unit is performing at above-market levels, supported by blockbuster drugs like Darzalex and Stelara, and contributions from newer drugs. J&J is focusing on growing its MedTech unit through new products. However, macroeconomic headwinds like inflationary pressure and rising input costs are hurting margins. Stelara’s upcoming loss of exclusivity in late 2023 is a concern. J&J has taken meaningful steps to resolve its talc and opioid litigation. However, the talc issues continue to remain a concern for investors.
Zacks Rank and Stocks to Consider
J&J currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Johnson & Johnson Price, Consensus and EPS Surprise
Johnson & Johnson price-consensus-eps-surprise-chart | Johnson & Johnson Quote
Some better-ranked biotech companies are Erasca (ERAS - Free Report) , Omega Therapeutics (OMGA - Free Report) and Alkermes (ALKS - Free Report) , each sporting a Zacks Rank #1.
In the past 60 days, estimates for Erasca’s 2023 loss per share have narrowed from $1.34 to $1.29. In the same period, the loss per share estimate for 2024 has improved from $1.71 to $1.54. Shares of Erasca have declined 37.2% in the year-to-date period.
Earnings of Erasca beat estimates in each of the last four quarters, witnessing an earnings surprise of 12.89%, on average. In the last reported quarter, Erasca’s earnings beat estimates by 26.67%.
In the past 60 days, estimates for Omega Therapeutics’ 2023 loss per share have narrowed from $2.18 to $2.05. During the same period, the loss estimates per share for 2024 have improved from $2.22 to $2.01. In the year so far, shares of Omega Therapeutics have lost 9%.
Earnings of Omega Therapeutics beat estimates in two of the last four quarters, missed the mark on one occasion while meeting the mark on another. On average, the company witnessed an earnings surprise of 8.24%. In the last reported quarter, Omega Therapeutics’ earnings beat estimates by 21.88%.
In the past 60 days, estimates for Alkermes’ 2023 earnings per share have risen from 20 cents to $1.02. During the same period, the earnings per share for 2024 have risen from $1.73 to $2.08. Year to date, shares of Alkermes have risen 21.4%.
Earnings of Alkermes beat estimates in each of the last four quarters, witnessing an earnings surprise of 90.83%, on average. In the last reported quarter, Alkermes’ earnings beat estimates by 133.33%.