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J&J (JNJ) Beats on Q3 Earnings, Cuts 2022 Sales View on Fx Woes
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Johnson & Johnson’s (JNJ - Free Report) third-quarter 2022 earnings came in at $2.55 per share, which beat the Zacks Consensus Estimate of $2.49. Earnings declined 1.9% from the year-ago period. Earnings slightly missed our estimates of $2.57 per share.
Adjusted earnings exclude intangible amortization and some other special items. Including these items, J&J reported third-quarter earnings of $1.68 per share, up 22.6% from the year-ago quarter.
Sales of this drug and consumer products giant came in at $23.79 billion, which marginally beat the Zacks Consensus Estimate of $23.28 billion as well as our estimates of $23.64 billion. Sales rose 1.9% from the year-ago quarter, reflecting an operational increase of 8.1% and a negative currency impact of 6.2%.
Organically, excluding the impact of acquisitions and divestitures, sales rose 8.2% on an operational basis compared with an 8.1% increase in the previous quarter.
Third-quarter sales in the domestic market rose 4.1% to $12.45 billion. International sales declined 0.3% on a reported basis to $11.3 billion, reflecting an operational increase of 12.3%, which was more than offset by a negative currency impact of 12.6%. Excluding the impact of all acquisitions and divestitures, on an adjusted operational basis, international sales rose 12.4% in the quarter.
Segment Details
Pharmaceutical segment sales rose 2.6% year over year to $13.21 billion, reflecting 9% operational growth and a 6.4% negative currency impact. Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 9.2%. Pharmaceutical segment sales exceeded our estimates of $13.16 billion as well as the Zacks Consensus Estimate of $13.09 billion.
The year-over-year sales increase was led by higher penetration and new indications across key products, such as Darzalex and Stelara. Other core products like Invega Sustenna and relatively newer drugs, Erleada and Tremfya contributed significantly to sales growth. Sales of J&J’s single-dose COVID-19 vaccine were less than in the previous quarter. The sales growth was also dampened by lower sales of key medicine, Imbruvica and generic/biosimilar competition to drugs like Zytiga and Remicade.
Darzalex sales rose 29.8% year over year to $2.05 billion in the quarter, which matched our estimates. Stelara sales grew 3.0% to $2.45 billion in the quarter. Stelara sales were slightly less than our estimate of $2.63 billion.
Imbruvica sales declined 14.6% to $911 million. Rising competitive pressure in the United States due to new oral competition has been hurting the sales of Imbruvica for the past few quarters. Imbruvica sales also missed our estimates of $952.8 million.
PAH revenues of $852 million declined 1.9% year over year. Invega Sustenna/Xeplion/Invega Trinza/Trevicta sales rose 2.6% to $1.03 billion in the quarter. Simponi/Simponi Aria sales declined 4.6% to $545 million, while Prezista sales decreased 6.4% to $485 million.
Xarelto sales rose 8.4% in the quarter to $689 million while sales of Invokana/Invokamet declined 18.4% to $109 million.
Among the newer medicines, Erleada generated sales of $490 million in the quarter, up 42.2% year over year. Tremfya recorded sales of $729 million in the quarter, up 35.9% year over year.
Zytiga sales declined 16.7% to $456 million in the quarter due to generic competition. Sales of Remicade were down 26.6% in the quarter to $558 million.
J&J’s single-dose COVID-19 vaccine generated sales of $489 million in the third quarter compared with $544 million in the second quarter. International sales accounted for all the COVID-19 vaccine sales. We expected COVID-19 vaccine sales of $224.3 million for the third quarter.
The MedTech segment sales came in at $6.78 billion, up 2.1% from the year-ago period, as an operational increase of 8.1% was offset by a negative currency movement of 6.0%. The MedTech segment sales were in line with our as well as the Zacks Consensus Estimate of $6.78 billion. A recovery in surgical procedures which were disrupted by the pandemic are boosting sales in the MedTech segment.
Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 8.1%.
The Consumer segment recorded revenues of $3.79 billion in the reported quarter, down 0.4% year over year, reflecting a 4.7% operational increase and a 5.1% negative currency impact. The Consumer segment sales came ahead of our as well as the Zacks Consensus Estimate of $3.70 billion.
Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 4.8% worldwide.
J&J plans to separate its Consumer Health segment into a new publicly-traded company called Kenvue. The separation is expected to be executed in 2023.
Lowers 2022 Guidance
J&J lowered its sales expectations for 2022 mainly due to currency headwinds. J&J expects to generate revenues in the range of $93.0 billion to $93.5 billion, lower than the previous expectation of $93.3 billion to $94.3 billion. This guidance excludes any revenues from J&J’s COVID-19 vaccine. Revenue growth is expected in the range of 1.8%-2.3% compared with 2.1%-3.1%, expected previously.
Excluding the COVID-19 vaccine, operational constant-currency sales are expected to increase in the range of 6.7%-7.2% compared with 6.5%-7.5% expected previously.
The adjusted operational sales (excluding currency impact, acquisitions/divestitures) growth guidance is the same as the operational constant-currency sales discussed above.
The adjusted earnings per share guidance was tightened from a range of $10.00-$10.10 per share to $10.02-$10.07 per share.
The earnings range indicates an increase of 2.3%-2.8%, compared with 2.1%-3.1% expected previously. On an operational, constant-currency basis, adjusted earnings per share are expected to increase 9.2% – 9.7 % versus the prior expectation of 8.7% – 9.7%
Our Take
J&J reported better-than-expected third-quarter results as it beat estimates for both earnings and sales.
J&J’s shares were up 2% in pre-market trading. This year so far, J&J’s shares have declined 2.7% compared with the industry’s 4% decline.
Image Source: Zacks Investment Research
Its Pharmaceuticals unit sales continued to do well despite the negative currency impact. Sales also improved in the MedTech and Consumer segments. However, currency headwinds reduced its sales by 6% in the quarter amid a strengthening U.S. dollar. J&J slightly lowered its sales outlook for the year due to expected currency headwinds. It also tightened its adjusted earnings guidance range. J&J is facing several macroeconomic headwinds, including inflationary pressure and higher input costs, which, coupled with currency headwinds, are denting its profits.
Some better-ranked biotech stocks include Castle Biosciences (CSTL - Free Report) , Codiak BioSciences and Kamada . While Castle Biosciences has a Zacks Rank #1, Codiak BioSciences and Kamada have a Zacks Rank of 2 (Buy).
In the past 60 days, estimates for Castle Biosciences’ 2022 loss per share have narrowed from $3.07 to $2.81, while that for 2023 have narrowed from $3.08 to $2.93. Shares of Castle Biosciences have declined 45.6% in the year-to-date period.
Earnings of Castle Biosciences beat estimates in two of the last four quarters and missed the mark twice, witnessing an earnings surprise of 19.46%, on average.
In the past 60 days, estimates for Codiak BioSciences’ 2022 loss per share have narrowed from $1.94 to $1.81. During the same period, the loss estimates per share for 2023 have narrowed from $2.14 to $1.53. Shares of Codiak BioSciences have lost 94.3% in the year-to-date period.
Earnings of Codiak BioSciences beat estimates in three of the last four quarters and missed the mark just once, delivering an earnings surprise of 35.40%, on average.
In the past 90 days, estimates for Kamada’s 2023 earnings per share have increased from 1 cent to 26 cents. Shares of Kamada have lost 31.7% in the year-to-date period.
The earnings of Kamada missed estimates in three of the last four quarters and beat the mark just once, witnessing a negative earnings surprise of 212.5%, on average.
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J&J (JNJ) Beats on Q3 Earnings, Cuts 2022 Sales View on Fx Woes
Johnson & Johnson’s (JNJ - Free Report) third-quarter 2022 earnings came in at $2.55 per share, which beat the Zacks Consensus Estimate of $2.49. Earnings declined 1.9% from the year-ago period. Earnings slightly missed our estimates of $2.57 per share.
Adjusted earnings exclude intangible amortization and some other special items. Including these items, J&J reported third-quarter earnings of $1.68 per share, up 22.6% from the year-ago quarter.
Sales of this drug and consumer products giant came in at $23.79 billion, which marginally beat the Zacks Consensus Estimate of $23.28 billion as well as our estimates of $23.64 billion. Sales rose 1.9% from the year-ago quarter, reflecting an operational increase of 8.1% and a negative currency impact of 6.2%.
Organically, excluding the impact of acquisitions and divestitures, sales rose 8.2% on an operational basis compared with an 8.1% increase in the previous quarter.
Third-quarter sales in the domestic market rose 4.1% to $12.45 billion. International sales declined 0.3% on a reported basis to $11.3 billion, reflecting an operational increase of 12.3%, which was more than offset by a negative currency impact of 12.6%. Excluding the impact of all acquisitions and divestitures, on an adjusted operational basis, international sales rose 12.4% in the quarter.
Segment Details
Pharmaceutical segment sales rose 2.6% year over year to $13.21 billion, reflecting 9% operational growth and a 6.4% negative currency impact. Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 9.2%. Pharmaceutical segment sales exceeded our estimates of $13.16 billion as well as the Zacks Consensus Estimate of $13.09 billion.
The year-over-year sales increase was led by higher penetration and new indications across key products, such as Darzalex and Stelara. Other core products like Invega Sustenna and relatively newer drugs, Erleada and Tremfya contributed significantly to sales growth. Sales of J&J’s single-dose COVID-19 vaccine were less than in the previous quarter. The sales growth was also dampened by lower sales of key medicine, Imbruvica and generic/biosimilar competition to drugs like Zytiga and Remicade.
Darzalex sales rose 29.8% year over year to $2.05 billion in the quarter, which matched our estimates. Stelara sales grew 3.0% to $2.45 billion in the quarter. Stelara sales were slightly less than our estimate of $2.63 billion.
Imbruvica sales declined 14.6% to $911 million. Rising competitive pressure in the United States due to new oral competition has been hurting the sales of Imbruvica for the past few quarters. Imbruvica sales also missed our estimates of $952.8 million.
PAH revenues of $852 million declined 1.9% year over year. Invega Sustenna/Xeplion/Invega Trinza/Trevicta sales rose 2.6% to $1.03 billion in the quarter. Simponi/Simponi Aria sales declined 4.6% to $545 million, while Prezista sales decreased 6.4% to $485 million.
Xarelto sales rose 8.4% in the quarter to $689 million while sales of Invokana/Invokamet declined 18.4% to $109 million.
Among the newer medicines, Erleada generated sales of $490 million in the quarter, up 42.2% year over year. Tremfya recorded sales of $729 million in the quarter, up 35.9% year over year.
Zytiga sales declined 16.7% to $456 million in the quarter due to generic competition. Sales of Remicade were down 26.6% in the quarter to $558 million.
J&J’s single-dose COVID-19 vaccine generated sales of $489 million in the third quarter compared with $544 million in the second quarter. International sales accounted for all the COVID-19 vaccine sales. We expected COVID-19 vaccine sales of $224.3 million for the third quarter.
The MedTech segment sales came in at $6.78 billion, up 2.1% from the year-ago period, as an operational increase of 8.1% was offset by a negative currency movement of 6.0%. The MedTech segment sales were in line with our as well as the Zacks Consensus Estimate of $6.78 billion. A recovery in surgical procedures which were disrupted by the pandemic are boosting sales in the MedTech segment.
Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 8.1%.
The Consumer segment recorded revenues of $3.79 billion in the reported quarter, down 0.4% year over year, reflecting a 4.7% operational increase and a 5.1% negative currency impact. The Consumer segment sales came ahead of our as well as the Zacks Consensus Estimate of $3.70 billion.
Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 4.8% worldwide.
J&J plans to separate its Consumer Health segment into a new publicly-traded company called Kenvue. The separation is expected to be executed in 2023.
Lowers 2022 Guidance
J&J lowered its sales expectations for 2022 mainly due to currency headwinds. J&J expects to generate revenues in the range of $93.0 billion to $93.5 billion, lower than the previous expectation of $93.3 billion to $94.3 billion. This guidance excludes any revenues from J&J’s COVID-19 vaccine. Revenue growth is expected in the range of 1.8%-2.3% compared with 2.1%-3.1%, expected previously.
Excluding the COVID-19 vaccine, operational constant-currency sales are expected to increase in the range of 6.7%-7.2% compared with 6.5%-7.5% expected previously.
The adjusted operational sales (excluding currency impact, acquisitions/divestitures) growth guidance is the same as the operational constant-currency sales discussed above.
The adjusted earnings per share guidance was tightened from a range of $10.00-$10.10 per share to $10.02-$10.07 per share.
The earnings range indicates an increase of 2.3%-2.8%, compared with 2.1%-3.1% expected previously. On an operational, constant-currency basis, adjusted earnings per share are expected to increase 9.2% – 9.7 % versus the prior expectation of 8.7% – 9.7%
Our Take
J&J reported better-than-expected third-quarter results as it beat estimates for both earnings and sales.
J&J’s shares were up 2% in pre-market trading. This year so far, J&J’s shares have declined 2.7% compared with the industry’s 4% decline.
Image Source: Zacks Investment Research
Its Pharmaceuticals unit sales continued to do well despite the negative currency impact. Sales also improved in the MedTech and Consumer segments. However, currency headwinds reduced its sales by 6% in the quarter amid a strengthening U.S. dollar. J&J slightly lowered its sales outlook for the year due to expected currency headwinds. It also tightened its adjusted earnings guidance range. J&J is facing several macroeconomic headwinds, including inflationary pressure and higher input costs, which, coupled with currency headwinds, are denting its profits.
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 and Consensus
Johnson & Johnson price-consensus-chart | Johnson & Johnson Quote
Some better-ranked biotech stocks include Castle Biosciences (CSTL - Free Report) , Codiak BioSciences and Kamada . While Castle Biosciences has a Zacks Rank #1, Codiak BioSciences and Kamada have a Zacks Rank of 2 (Buy).
In the past 60 days, estimates for Castle Biosciences’ 2022 loss per share have narrowed from $3.07 to $2.81, while that for 2023 have narrowed from $3.08 to $2.93. Shares of Castle Biosciences have declined 45.6% in the year-to-date period.
Earnings of Castle Biosciences beat estimates in two of the last four quarters and missed the mark twice, witnessing an earnings surprise of 19.46%, on average.
In the past 60 days, estimates for Codiak BioSciences’ 2022 loss per share have narrowed from $1.94 to $1.81. During the same period, the loss estimates per share for 2023 have narrowed from $2.14 to $1.53. Shares of Codiak BioSciences have lost 94.3% in the year-to-date period.
Earnings of Codiak BioSciences beat estimates in three of the last four quarters and missed the mark just once, delivering an earnings surprise of 35.40%, on average.
In the past 90 days, estimates for Kamada’s 2023 earnings per share have increased from 1 cent to 26 cents. Shares of Kamada have lost 31.7% in the year-to-date period.
The earnings of Kamada missed estimates in three of the last four quarters and beat the mark just once, witnessing a negative earnings surprise of 212.5%, on average.