Send me real-time posts from this site at my email
Zacks

J&J (JNJ) Beats on Q3 Earnings, Misses on Sales, Ups EPS View

Johnson & Johnson’s JNJ third-quarter 2021 earnings came in at $2.60 per share, which beat the Zacks Consensus Estimate of $2.37. Earnings increased 18.2% from the year-ago period.

Adjusted earnings exclude intangible amortization and some other special items. Including these items, J&J reported third-quarter earnings of $1.37 per share, up 3% from the year-ago quarter.

Sales of this drug and consumer products giant came in at $23.3 billion, which slightly missed the Zacks Consensus Estimate of $23.6 billion. Sales rose 10.7% from the year-ago quarter, reflecting an operational increase of 9.9% and a positive currency impact of 0.8%.

Organically, excluding the impact of acquisitions and divestitures, sales rose 10.6% on an operational basis compared with 23.8% increase seen in the previous quarter.

Third-quarter sales in the domestic market rose 7.9% to $11.96 billion. International sales rose 13.8% on a reported basis to $11.38 billion, reflecting an operational increase of 12.1% and a currency impact of 1.7%. Excluding the impact of all acquisitions and divestitures, on an adjusted operational basis, international sales rose 13.5% in the quarter.

Segment Details

Pharmaceutical segment sales rose 13.8% year over year to $12.99 billion, reflecting 13.2% operational growth and 0.6% positive currency impact. Excluding the impact of all acquisitions and divestitures, on an operational basis, worldwide sales rose 13.8%.

The sales increase was led by higher penetration and new indications across key products, such as Darzalex and Stelara. Other core products like Invega Sustenna, higher pulmonary arterial hypertension (PAH) revenues and new drugs, Erleada and Tremfya contributed significantly to sales growth. J&J’s single-dose COVID-19 vaccine also contributed to sales growth. However, the sales growth was dampened by generic/biosimilar competition to drugs like Zytiga and Remicade.

Darzalex sales rose 43.7% year over year to $1.58 billion in the quarter. Stelara sales grew 22.2% to $2.38 billion in the quarter. Imbruvica sales rose 3.5% to $1.07 billion. J&J markets Imbruvica in partnership with AbbVie ABBV. Imbruvica sales were below the Zacks Consensus Estimate of $1.14 billion.

PAH revenues of $868 million rose 15.9% year over year, driven by market penetration and share gains for Uptravi and Opsumit. Invega Sustenna sales rose 8.5% to $1.0 billion in the quarter. Simponi/Simponi Aria sales declined 3.3% to $571 million while Prezista sales decreased 1.7% to $517 million. 

Xarelto sales rose 0.8% in the quarter to $636 million while sales of Invokana/Invokamet declined 40.3% to $133 million.

Among the newer medicines, Erleada generated sales of $344 million in the quarter, up 66.7% year over year. Tremfya recorded sales of $537 million in the quarter, up 64.1% year over year.

Zytiga sales declined 7.2% to $548 million in the quarter due to generic competition. Sales of Procrit/Eprex declined 14.6% to $112 million in the quarter due to biosimilar competition. Sales of Remicade were down 17.4% in the quarter to $761 million. J&J markets Remicade in partnership with Merck MRK.

J&J’s single-dose COVID-19 vaccine generated sales of $502 million in the third quarter compared with $164 million in the second quarter. Please note that J&J is selling its vaccine on a not-for-profit basis.

Medical Devices segment sales came in at $6.64 billion, up 8% from the year-ago period, reflecting an operational increase of 7% and a positive currency movement of 1%.

Excluding the impact of all acquisitions and divestitures, on an operational basis, worldwide sales rose 7.6% driven by continued market recovery from COVID-19 impact as medical procedures increased.

The Consumer segment recorded revenues of $3.7 billion in the reported quarter, up 5.3% year over year, reflecting a 4.1% operational increase and 1.2% positive currency impact.

Excluding the impact of acquisitions and divestitures, adjusted operational sales rose 5.7% worldwide, helped by higher sales of OTC products. The sales increase was led by skin health/beauty products like Aveeno, digestive health products in OTC and Tylenol and Motrin in analgesics.

2021 Outlook

J&J significantly raised its previously issued guidance range for earnings while slightly increasing the lower end of the sales range for 2021.

The lower end of the sales range was upped from $93.8 billion-$94.6 billion to $94.1 billion - $94.6 billion. The guidance includes $2.5 billion in revenues from the COVID-19 vaccine. The new range indicates a year-over-year increase of 13.9%-14.5% compared with 13.5%-14.5% expected previously.

Excluding revenues from the COVID-19 vaccine, the base business is expected to generate revenues in the range of $91.6 billion to $92.1 billion compared with the previous expectation of $91.3 billion to $92.1 billion

Operational constant-currency sales are expected to increase in the range of 12.4%-13% (including COVID vaccine) compared with 12%-13% previously. Excluding the COVID-19 vaccine, operational constant-currency sales are expected to increase in the range of 9.4%-10%.

Adjusted operational sales (excluding currency impact, acquisitions/divestitures) are expected to be up 12.9%-13.5% compared with 12.5%-13.5% guided previously. Excluding the COVID-19 vaccine, adjusted operational sales are expected to increase in the range of 9.9%-10.5%.

Adjusted earnings per share are expected in the range of $9.77-$9.82 compared with $9.60-$9.70 expected previously. The new range indicates an increase of 21.7%-22.3% compared with the previously expected increase of 19.6%-20.8%. On an operational, constant-currency basis, adjusted earnings per share are expected to increase 20.2%-120.8% (previously 18.4%-19.6%).

Our Take

J&J reported mixed third-quarter earnings as it beat estimates for earnings but missed the same for sales. Its Pharmaceuticals unit continued to perform above market levels. Its Medical Devices segment benefited from an ongoing recovery after its sales were hurt significantly in the early stages of the pandemic. Sales of the Consumer segment remained strong after rebounding in the second quarter.

J&J raised its earnings forecast for the year, which led shares to rise 1% in pre-market trading. This year so far, J&J’s shares have risen 1.7% compared with the industry’s 9% growth.

Image Source: Zacks Investment Research

However, the company kept its COVID-19 vaccine sales outlook of $2.5 billion intact. The FDA is soon expected to give its decision on the booster dose of its vaccine. Last week, the FDA’s Vaccines and Related Biological Products advisory committee (VRBPAC) voted 19-0 recommending emergency use authorization (EUA) of the booster dose of J&J’s COVID-19 vaccine. The recommendation is for adults aged 18 and older and who have completed at least two months after the initial dose.

J&J’s present chairman and chief executive officer (CEO), Alex Gorsky, is stepping down from his role as CEO. Joaquin Duato, currently vice chairman of the company’s Executive Committee, will succeed him, effective Jan 3, 2022.

J&J currently has a Zacks Rank #4 (Sell).

Johnson & Johnson Price, Consensus and EPS Surprise

Johnson & Johnson price-consensus-eps-surprise-chart | Johnson & Johnson Quote

A better-ranked large drugmaker is Pfizer PFE, which has a Zacks Rank of #2 (Buy). Its stock is up 12.3% this year so far. Its earnings estimate for 2021 has risen from $4.06 per share to $4.07 per share while that for 2022 has gone up from $3.42 per share to $3.54 per share. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


Zacks' Top Picks to Cash in on Artificial Intelligence

In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.

See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Johnson & Johnson (JNJ): Free Stock Analysis Report
 
Pfizer Inc. (PFE): Free Stock Analysis Report
 
Merck & Co., Inc. (MRK): Free Stock Analysis Report
 
AbbVie Inc. (ABBV): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue