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J&J (JNJ) to Kick Off Pharma Q1 Earnings: Will it Beat?
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We expect Johnson & Johnson (JNJ - Free Report) , a healthcare bellwether, to beat expectations when it reports first-quarter 2017 results on Apr 18, before the opening bell. Last quarter, the company reported a positive earnings surprise of 1.28%.
J&J’s share price is up 8.8% so far this year, significantly ahead of the 5.5% increase witnessed by the Zacks classified Large-Cap Pharma industry.
J&J has consistently surpassed earnings expectations. The company’s earnings beat expectations in each of the last four quarters, with an average positive surprise of 2.43%.
Let's see how things are shaping up for this announcement.
Will its Pharma Segment Continue to Drive Results?
In the Pharmaceutical segment, new products like Imbruvica, Xarelto and Darzalex are performing impressively. Robust patient uptake in new indications, product approvals and demonstrated efficacy are propelling sales of Imbruvica. While Xarelto continues to gain market share and broader reimbursement, Darzalex is gaining acceptance as a treatment for multiple myeloma. Other drugs like Stelara, Invega Sustenna, and Simponi should also contribute meaningfully to the top line.
However, at the fourth quarter conference call, J&J said that Pharma segment is expected to see sluggish growth in 2017 compared with 2016 as quite a few products in its portfolio like Remicade and Concerta have slowed down and are facing competition. While biosimilar competition hurt key arthritis drug Remicade sales outside the U.S. in the fourth quarter, management said that Pfizer, Inc.’s (PFE - Free Report) at-risk biosimilar launch of Inflectra did not have any significant impact until the results were announced. Management is expected to comment on the impact of Pfizer’s Remicade biosimilar on first-quarter sales.
J&J continues to expect no biosimilar competition for Procrit in the U.S. or generic competition for Zytiga, Risperdal Consta, or Invega Sustenna in 2017.
Meanwhile, hepatitis C virus (HCV) treatment Olysio’s sales will keep declining due to increased competition, while Invega continues to face a sales decline due to generic competition.
However, J&J expects growth to accelerate in both the Medical Devices and Consumer segments in 2017.
The Consumer segment sales improved sequentially in the fourth quarter on the back of global Beauty and OTC products. It remains to be seen if the positive trend continues in the soon-to-be-reported quarter.
What Our Model Indicates
Our proven model shows that J&J is likely to beat on earnings because it has the right combination of the two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate ($1.78 per share) and the Zacks Consensus Estimate ($1.77 per share), is +0.57%. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: J&J has a Zacks Rank #3. The combination of J&J’s favorable Zacks Rank #3 and positive ESP makes us confident of an earnings beat in the upcoming release.
Sell-rated stocks (Zacks Rank #4 or 5), on the other hand, should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
A couple of stocks in the large cap pharmaceuticals sector that also have a positive Earnings ESP and a favorable Zacks Rank are:
Eli Lilly and Company (LLY - Free Report) has an Earnings ESP of +1.04% and a Zacks Rank #2. The company is scheduled to release results on Apr 25.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
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J&J (JNJ) to Kick Off Pharma Q1 Earnings: Will it Beat?
We expect Johnson & Johnson (JNJ - Free Report) , a healthcare bellwether, to beat expectations when it reports first-quarter 2017 results on Apr 18, before the opening bell. Last quarter, the company reported a positive earnings surprise of 1.28%.
J&J’s share price is up 8.8% so far this year, significantly ahead of the 5.5% increase witnessed by the Zacks classified Large-Cap Pharma industry.
J&J has consistently surpassed earnings expectations. The company’s earnings beat expectations in each of the last four quarters, with an average positive surprise of 2.43%.
Let's see how things are shaping up for this announcement.
Will its Pharma Segment Continue to Drive Results?
In the Pharmaceutical segment, new products like Imbruvica, Xarelto and Darzalex are performing impressively. Robust patient uptake in new indications, product approvals and demonstrated efficacy are propelling sales of Imbruvica. While Xarelto continues to gain market share and broader reimbursement, Darzalex is gaining acceptance as a treatment for multiple myeloma. Other drugs like Stelara, Invega Sustenna, and Simponi should also contribute meaningfully to the top line.
However, at the fourth quarter conference call, J&J said that Pharma segment is expected to see sluggish growth in 2017 compared with 2016 as quite a few products in its portfolio like Remicade and Concerta have slowed down and are facing competition. While biosimilar competition hurt key arthritis drug Remicade sales outside the U.S. in the fourth quarter, management said that Pfizer, Inc.’s (PFE - Free Report) at-risk biosimilar launch of Inflectra did not have any significant impact until the results were announced. Management is expected to comment on the impact of Pfizer’s Remicade biosimilar on first-quarter sales.
J&J continues to expect no biosimilar competition for Procrit in the U.S. or generic competition for Zytiga, Risperdal Consta, or Invega Sustenna in 2017.
Meanwhile, hepatitis C virus (HCV) treatment Olysio’s sales will keep declining due to increased competition, while Invega continues to face a sales decline due to generic competition.
However, J&J expects growth to accelerate in both the Medical Devices and Consumer segments in 2017.
The Consumer segment sales improved sequentially in the fourth quarter on the back of global Beauty and OTC products. It remains to be seen if the positive trend continues in the soon-to-be-reported quarter.
What Our Model Indicates
Our proven model shows that J&J is likely to beat on earnings because it has the right combination of the two key ingredients. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate ($1.78 per share) and the Zacks Consensus Estimate ($1.77 per share), is +0.57%. This is a meaningful indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: J&J has a Zacks Rank #3. The combination of J&J’s favorable Zacks Rank #3 and positive ESP makes us confident of an earnings beat in the upcoming release.
Sell-rated stocks (Zacks Rank #4 or 5), on the other hand, should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.
Other Stocks to Consider
A couple of stocks in the large cap pharmaceuticals sector that also have a positive Earnings ESP and a favorable Zacks Rank are:
Bristol-Myers Squibb Company (BMY - Free Report) is expected to release results on Apr 27. The company has an Earnings ESP of +4.05% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Eli Lilly and Company (LLY - Free Report) has an Earnings ESP of +1.04% and a Zacks Rank #2. The company is scheduled to release results on Apr 25.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 ""Strong Buys"" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 ""Strong Sells."" Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>