Back to top

Image: Bigstock

J&J (JNJ) Beats on Q2 Earnings & Sales, Ups View, Stock Rises

Read MoreHide Full Article

Johnson & Johnson’s (JNJ - Free Report) second-quarter 2021 earnings came in at $2.48 per share, which beat the Zacks Consensus Estimate of $2.28. Earnings increased 48.5% 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 $2.35 per share, up 72.8% from the year-ago quarter.

Sales of this drug and consumer products giant came in at $23.3 billion, which beat the Zacks Consensus Estimate of $22.31 billion. Sales rose 27.1% from the year-ago quarter, reflecting an operational increase of 23% and a positive currency impact of 4.1%.

Organically, excluding the impact of acquisitions and divestitures, sales rose 23.8% on an operational basis compared with 6% increase seen in the previous quarter.

Second-quarter sales in the domestic market rose 24.9% to $11.9 billion. International sales rose 29.5% on a reported basis to $11.4 billion, reflecting an operational increase of 20.9% and a currency impact of 8.6%. Excluding the impact of all acquisitions and divestitures, on an adjusted operational basis, international sales rose 22.4% in the quarter.

Segment Details

Pharmaceutical segment sales rose 17.2% year over year to $12.6 billion, reflecting 13.6% operational growth and 3.6% positive currency impact. Excluding the impact of all acquisitions and divestitures, on an operational basis, worldwide sales rose 14.1%, almost double than 7.4% increase in the previous quarter.

The sales increase was led by higher penetration and new indications across key products, such as Darzalex, Imbruvica and Stelara. Other core products like Invega Sustenna and new drugs, Erleada and Tremfya contributed significantly to sales growth.

Moreover, improvement in sales of some other key drugs like Xarelto seen in the past few quarters continued in the second quarter of 2021. The sales growth was hurt by generic/biosimilar competition to drugs like Zytiga and Remicade.

Darzalex sales rose 59.2% year over year to $1.43 billion in the quarter. Stelara sales grew 34% to $2.27 billion in the quarter. Imbruvica sales rose 17.7% to $1.17 billion. J&J markets Imbruvica in partnership with AbbVie (ABBV - Free Report) .

Pulmonary arterial hypertension (PAH) revenues of $870 million rose 10.4% year over year, driven by strong sales growth for Uptravi and Opsumit. Invega Sustenna sales rose 16.4% to $1.02 billion in the quarter. Simponi/Simponi Aria sales grew 6.9% to $584 million while Prezista sales decreased 1% to $505 million. 

Xarelto sales rose 1.8% in the quarter to $569.0 million, while sales of Invokana/Invokamet declined 10.9% to $160.0 million.

Among the newer medicines, Erleada generated sales of $302 million in the quarter compared with $261 million in the previous quarter. Tremfya recorded sales of $479 million in the quarter, up 40.2% year over year.

Zytiga sales declined 0.8% to $563 million in the quarter due to generic competition. Sales of Procrit/Eprex declined 6.6% to $127 million in the quarter due to biosimilar competition. Sales of Remicade were down 5.1% in the quarter to $888 million. J&J markets Remicade in partnership with Merck (MRK - Free Report) .

J&J’s single-dose COVID-19 vaccine, which was approved for emergency/conditional use in some countries this year, generated sales of $164 million in the second quarter compared with $100 million in the first quarter.

Medical Devices segment sales came in at $6.98 billion, up 62.7% from the year-ago period, reflecting an operational increase of 57.2% and a positive currency movement of 5.5%.

Excluding the impact of all acquisitions and divestitures, on an operational basis, worldwide sales rose 58.7% against an increase of 8.8% in the previous quarter driven by continued market recovery from COVID-19 impact as medical procedures ramped up. This segment was hit the hardest during the early stages of the pandemic due to deferral of medical procedures.

The Consumer segment recorded revenues of $3.74 billion in the reported quarter, up 13.3% year over year, reflecting 9.2% operational increase and 4.1% positive currency impact.

Excluding the impact of acquisitions and divestitures, adjusted operational sales rose 10% worldwide against a decrease of 2.9% seen in the previous quarter. The sales increase was led by recovery in skin health/beauty products like Neutrogena, Aveeno and growth of OTC products, international analgesics, and digestive health products and Band Aid bandages in wound care products.

2021 Outlook

J&J raised its previously issued guidance range for earnings and sales for 2021 to include $2.5 billion contribution from its COVID-19 vaccine as well as expected growth in the base business. It raised its revenue guidance from a range of $90.6 billion to $91.6 billion to $93.8 billion to $94.6 billion, which includes $2.5 billion in revenues from the COVID-19 vaccine. The new range indicates a year-over-year increase of 13.5%-14.5% compared with 9.7%-10.9% expected previously.

Excluding revenues from the COVID-19 vaccine, the base business is expected to generate revenues in the range of $91.3 billion to $92.1 billion, which is also above the previous expectation.

Operational constant-currency sales are expected to increase in the range of 12%-13% (including COVID vaccine) compared with 8.2%-9.4% previously. Excluding the COVID-19 vaccine, operational constant-currency sales are expected to increase in the range of 9%-10%.

Adjusted operational sales (excluding currency impact, acquisitions/divestitures) are expected to be up 12.5%-13.5% compared with 8.7%-9.9% guided previously. Excluding the COVID-19 vaccine, adjusted operational sales are expected to increase in the range of 9.5%-10.5%.

Adjusted earnings per share are expected in the range of $9.60-$9.70 compared with $9.42-$9.57 expected previously. The new range indicates an increase of 19.6%-20.8% compared with the previously expected increase of 17.3%-19.2%. On an operational basis, constant-currency basis, adjusted earnings per share are expected to increase 18.4%-19.6% (previously 15.8%-17.7%).

Our Take

J&J reported stronger-than-expected second-quarter earnings driven by strong sales and earnings growth across all three segments. Its Pharmaceuticals unit continued to perform above market levels. The recovery in the Medical Devices unit continued while sales rebounded in its Consumer Health unit.

J&J raised its forecast for the year, which led shares to rise 1% in pre-market trading. This year so far, J&J’s shares have risen 7% compared with the industry’s 9% growth.

 

Zacks Investment Research
Image Source: Zacks Investment Research

While the company expects to generate $2.5 billion from its COVID-19 vaccine in 2021, it is far less than rival Pfizer (PFE - Free Report) and Moderna’s annual sales guidance of their respective COVID-19 vaccines. This could be because J&J faces production delays and safety issues (related to blood clotting events). Please note that J&J is selling its vaccine on a not-for-profit basis

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 and EPS Surprise

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


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Johnson & Johnson (JNJ) - free report >>

Pfizer Inc. (PFE) - free report >>

Merck & Co., Inc. (MRK) - free report >>

AbbVie Inc. (ABBV) - free report >>