Back to top

Image: Bigstock

JNJ Beats on Q2 Earnings, Cuts View: ETFs in Focus

Read MoreHide Full Article

Johnson & Johnson (JNJ - Free Report) set the ball rolling for the pharma and medical device manufacturer space’s second-quarter 2022 earnings on Jul 19, before the opening bell. The world's biggest healthcare products’ maker continued its long streak of earnings beat. It outpaced revenue estimates as well but cut its full-year guidance on a strong dollar.

Following the results, JNJ shares fell 1.5% on the day. This has put ETFs having the highest allocation to this diversified drug maker such as iShares U.S. Pharmaceuticals ETF (IHE - Free Report) , iShares Evolved U.S. Innovative Healthcare ETF , Health Care Select Sector SPDR Fund (XLV - Free Report) , iShares U.S. Healthcare ETF (IYH - Free Report) and Vanguard Health Care ETF (VHT - Free Report) in the spotlight.

Earnings per share came in at $2.59, beating the Zacks Consensus Estimate of $2.57 and improving 4.4% from the year-ago quarter. Revenues grew 3% year over year to $24 billion and edged past the Zacks Consensus Estimate of $23.9 billion. The solid performance was driven by strong demand for cancer drug Darzalex and its COVID-19 vaccine.

Johnson & Johnson reiterated its plan to separate its consumer-health business into a stand-alone company in 2023. The move will leave JNJ with its pharmaceutical and medical-device units (see: all the Healthcare ETFs here).

For 2022, Johnson & Johnson lowered its sales growth target to 2.1-3.1% from the previous guidance of 3.8-4.8%. The earnings per share guidance range has been revised down from $10.15-$10.35 to $10.00-$10.10, representing year-over-year growth of 2.1-3.1%. The Zacks Consensus Estimate is pegged at 2.47% for revenue growth and $10.20 for earnings per share.

iShares U.S. Pharmaceuticals ETF (IHE - Free Report)

iShares U.S. Pharmaceuticals ETF provides exposure to 41 companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index. Of these, Johnson and Johnson takes the top spot, accounting for a 22.2% share.

iShares U.S. Pharmaceuticals ETF has $440 million in AUM and charges 42 bps in fees and expenses. Volume is lower as it exchanges about 20,000 shares a day. The fund has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

iShares Evolved U.S. Innovative Healthcare ETF

iShares Evolved U.S. Innovative Healthcare ETF is an actively managed ETF and employs data science techniques to identify companies with exposure to the innovative healthcare sector. Holding 268 stocks in its basket, JNJ is the top firm with a 10% allocation.

iShares Evolved U.S. Innovative Healthcare ETF has accumulated $37.4 million in its asset base and trades in a meager volume of 3,000 shares per day on average. It charges 18 bps in annual fees (read: Pharma & Biotech ETFs at One-Month High: Here's Why).

Health Care Select Sector SPDR Fund (XLV - Free Report)

Health Care Select Sector SPDR Fund is the most-popular health care ETF and follows the Health Care Select Sector Index. It holds 64 securities in its basket, with UnitedHealth taking the top spot at 10.2% of the assets. Pharma, and health care providers and services take the largest share at 30.9% and 23.6% share, respectively, from a sector look, while health care equipment and supplies, biotech and life sciences tools & services have double-digit exposure each.

Health Care Select Sector SPDR Fund manages nearly $39.2 billion in its asset base and trades in a heavy volume of around 11.2 million shares. The expense ratio comes in at 0.10%. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: ETFs to Buy on UnitedHealth's Q2 Earnings Beat).

iShares U.S. Healthcare ETF (IYH - Free Report)

iShares U.S. Healthcare ETF offers exposure to 112 U.S. healthcare equipment and services, pharmaceuticals, and biotechnology companies by tracking the Russell 1000 Health Care RIC 22.5/45 Capped Gross Index. Here again, UnitedHealth is the top firm accounting for 9.9% of the total assets. In terms of industrial exposure, pharma takes the top spot at 31.5%, followed by health care equipment (17.8%) and biotech (17%).

iShares U.S. Healthcare ETF has amassed $3 billion in its asset base, while charging 41 bps in annual fees. It trades in a moderate volume of around 51,000 shares a day and has a Zacks ETF Rank #1 with a Medium risk outlook.

Vanguard Health Care ETF (VHT - Free Report)

Vanguard Health Care ETF tracks the MSCI US Investable Market Health Care 25/50 Index and holds 408 stocks in its basket. Of these, UnitedHealth takes the top spot with an 8.6% allocation. Pharma takes the largest share at 28.9%, while biotech and health care equipment round off the top three spots.

Vanguard Health Care ETF is also one of the most popular and liquid ETFs, with AUM of $16.3 billion and an average daily volume of about 390,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #1 with a Medium risk outlook.