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Johnson & Johnson’s (JNJ - Free Report) first-quarter 2023 earnings came in at $2.68 per share, which beat the Zacks Consensus Estimate of $2.51 as well as our estimate of $2.49 per share. Earnings rose 0.4% from the year-ago period.
Adjusted earnings exclude intangible amortization and some other special items. Including these items, J&J reported first-quarter loss of 3 cents per share, down 101.6% from the year-ago quarter.
Sales of this drug and consumer products giant came in at $24.75 billion, beating the Zacks Consensus Estimate of $23.57 billion. Sales rose 5.6% from the year-ago quarter, reflecting an operational increase of 9% and a negative currency impact of 3.4%. Sales also beat our estimates of $23.6 billion.
Organically, excluding the impact of acquisitions and divestitures, sales rose 7.6% on an operational basis compared with an 0.8% increase in the previous quarter.
First-quarter sales in the domestic market rose 9.7% to $12.52 billion. International sales rose 1.8% on a reported basis to $12.23 billion, reflecting an operational increase of 8.3%, plus a negative currency impact of 6.5%. Excluding the impact of all acquisitions and divestitures, on an adjusted operational basis, international sales rose 7.9% in the quarter.
Segment Details
Pharmaceutical segment sales rose 4.2% year over year to $13.41 billion, reflecting a 7.2% operational increase and a 3% negative currency impact. Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 7.2%. Pharmaceutical segment sales exceeded our estimates of $12.62 billion.
Higher sales of key products, such as Darzalex, Stelara and Erleada and J&J’s single-dose COVID-19 vaccine drove the segment’s growth. The sales growth was dampened by lower sales of Imbruvica and generic/biosimilar competition to drugs like Zytiga and Remicade.
Darzalex sales rose 22% year over year to $2.26 billion in the quarter, which beat our estimates of $2.14 billion. Stelara sales grew 6.8% to $2.44 billion in the quarter. Stelara sales beat our estimate of $2.42 billion.
Imbruvica sales declined 20.3% to $827 million. Rising competitive pressure in the United States due to new oral competition has been hurting sales of Imbruvica for the past few quarters. Imbruvica sales missed our estimates of $870.6 million.
Among the newer medicines, Erleada generated sales of $542 million in the quarter, up 35.6% year over year. Tremfya recorded sales of $640 million in the quarter, up 8.4% year over year. New drug, Carvykti, a BCMA CAR-T therapy approved for relapsed or refractory multiple myeloma, recorded sales of $72 million. New drug, Spravato, approved for treatment-resistant depression, recorded sales of $131 million, up 86.9% year over year.
PAH revenues of $872 million rose 2.4% year over year. Xarelto sales rose 13.7% in the quarter to $578 million.
Invega Sustenna/Xeplion/Invega Trinza/Trevicta sales declined 0.4% to $1.04 billion in the quarter. Simponi/Simponi Aria sales declined 5.8% to $537 million, while Prezista sales decreased 4.8% to $477 million.
Zytiga sales declined 54.5% to $245 million in the quarter due to generic competition. Sales of Remicade were down 26.5% in the quarter to $487 million.
J&J’s single-dose COVID-19 vaccine generated sales of $747 million in the quarter, up 63.4% year over year. International sales accounted for all COVID-19 vaccine sales.
The MedTech segment sales came in at $7.48 billion, up 7.3% from the year-ago period, as an operational increase of 11% was offset by a negative currency movement of 3.7%. MedTech segment sales beat our estimate of $7.32 billion.
Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 6.4%. Abiomed, acquired last year, contributed 4.6% of sales growth. With the acquisition of Abiomed, the MedTech segment now has 12 platforms with more than $1 billion in annual sales.
The Consumer Health segment recorded revenues of $3.85 billion in the reported quarter, up 7.4% year over year, reflecting an 11.3% operational increase and a 3.9% negative currency impact. Consumer Health segment sales came ahead of our estimate of $3.640 million.
Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 11.3% worldwide, driven by over-the-counter products.
J&J plans to separate its Consumer Health segment into a new publicly-traded company called Kenvue. The separation is expected to be executed this year.
Ups 2023 Guidance
The company raised its previously issued financial guidance for 2023.
J&J raised its revenue guidance to a range of $97.9 billion to $98.9 billion from $96.9 billion to $97.9 billion. This guidance excludes any revenues from J&J’s COVID-19 vaccine. The Zacks Consensus Estimate is pegged at $97.62 billion. Revenue growth is now expected in the range of 5.5% – 6.5% versus the prior expectation of 4.5% – 5.5%.
Excluding the COVID-19 vaccine, operational constant-currency sales are expected to increase in the range of 5.5% – 6.5% versus the prior expectation of 4.5%-5.5%. Adjusted operational sales (excluding currency impact, acquisitions/divestitures) growth is now expected to be 4.5%-5.5% (prior expectation of 3.5%-4.5%).
The adjusted earnings per share guidance was raised from a range of $10.45 – $10.65 to $10.60 – $10.70 per share. The Zacks Consensus Estimate is pegged at $10.50 per share.
The earnings range indicates an increase of 4.5%-5.5% versus the prior expectation of 3%-5%. On an operational, constant-currency basis, adjusted earnings per share are expected to increase 3.5%-4.5% versus the prior expectation of 2.5%-4.5%.
Our Take
J&J kickstarted the earnings season for the drug and biotech sector by reporting strong first-quarter results. It beat estimates for earnings as well as sales. All three segments delivered a strong performance in the quarter, gaining from strong demand trends for its products.
J&J also announced a 5.3% increase in the quarterly dividend to $1.19 per share from $1.13 per share.
J&J’s shares were up more than 1% in pre-market trading in response to the upbeat results and guidance increase. In the past year, J&J’s shares have declined 9.5% against the industry’s 9.1% increase.
Image Source: Zacks Investment Research
J&J’s Pharma unit is performing at above-market levels, supported by blockbuster drugs, Darzalex and Stelara, and contributions from newer drugs. J&J is focusing on growing its MedTech unit through new products. However, macroeconomic headwinds like inflationary pressure and rising input costs are hurting margins. Headwinds like generic competition and pricing pressure continue. Stelara’s upcoming loss of exclusivity in 2023 is a concern. J&J has taken meaningful steps to resolve its talc and opioid litigation. Earlier this month, J&J offered to pay $8.9 billion over a period of 25 years to completely resolve its cosmetic talc litigation.
Some better-ranked drugmakers/biotech companies are Novo Nordisk (NVO - Free Report) Innoviva (INVA - Free Report) and Sanofi (SNY - Free Report) . While Novo Nordisk has a Zacks Rank of 1, Innoviva and Sanofi have a Zacks Rank #2 (Buy).
Estimates for Novo Nordisk’s 2023 earnings per share have increased from $4.20 to $4.52 over the past 60 days. Estimates for 2024 have jumped from $4.90 per share to $5.26 in the same timeframe. Novo Nordisk’s stock has surged 49.5% in the past year.
Novo Nordisk beat earnings expectations in three of the trailing four quarters. The company delivered a four-quarter earnings surprise of 3.00%, on average.
Estimates for Sanofi’s earnings per share have increased from $4.40 to $4.41 over the past 60 days while that for 2024 have gone up from $4.86 per share to $4.89 per share. Sanofi’s stock has risen 1.2% in the past year.
Sanofi beat earnings expectations in three of the trailing four quarters. The company delivered a four-quarter earnings surprise of 7.68%, on average.
Estimates for Innoviva’s 2023 earnings per share have increased from $1.04 to $1.37. Estimates for 2024 have jumped from 52 cents per share to $1.25 in the past 60 days. Innoviva’s stock has declined 33.6% in the past year.
Innoviva missed earnings expectations in three of the trailing four quarters. The company delivered a four-quarter negative earnings surprise of 50.78%, on average.
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J&J (JNJ) Q1 Earnings & Sales Top, 2023 View Up, Stock Rises
Johnson & Johnson’s (JNJ - Free Report) first-quarter 2023 earnings came in at $2.68 per share, which beat the Zacks Consensus Estimate of $2.51 as well as our estimate of $2.49 per share. Earnings rose 0.4% from the year-ago period.
Adjusted earnings exclude intangible amortization and some other special items. Including these items, J&J reported first-quarter loss of 3 cents per share, down 101.6% from the year-ago quarter.
Sales of this drug and consumer products giant came in at $24.75 billion, beating the Zacks Consensus Estimate of $23.57 billion. Sales rose 5.6% from the year-ago quarter, reflecting an operational increase of 9% and a negative currency impact of 3.4%. Sales also beat our estimates of $23.6 billion.
Organically, excluding the impact of acquisitions and divestitures, sales rose 7.6% on an operational basis compared with an 0.8% increase in the previous quarter.
First-quarter sales in the domestic market rose 9.7% to $12.52 billion. International sales rose 1.8% on a reported basis to $12.23 billion, reflecting an operational increase of 8.3%, plus a negative currency impact of 6.5%. Excluding the impact of all acquisitions and divestitures, on an adjusted operational basis, international sales rose 7.9% in the quarter.
Segment Details
Pharmaceutical segment sales rose 4.2% year over year to $13.41 billion, reflecting a 7.2% operational increase and a 3% negative currency impact. Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 7.2%. Pharmaceutical segment sales exceeded our estimates of $12.62 billion.
Higher sales of key products, such as Darzalex, Stelara and Erleada and J&J’s single-dose COVID-19 vaccine drove the segment’s growth. The sales growth was dampened by lower sales of Imbruvica and generic/biosimilar competition to drugs like Zytiga and Remicade.
Darzalex sales rose 22% year over year to $2.26 billion in the quarter, which beat our estimates of $2.14 billion. Stelara sales grew 6.8% to $2.44 billion in the quarter. Stelara sales beat our estimate of $2.42 billion.
Imbruvica sales declined 20.3% to $827 million. Rising competitive pressure in the United States due to new oral competition has been hurting sales of Imbruvica for the past few quarters. Imbruvica sales missed our estimates of $870.6 million.
Among the newer medicines, Erleada generated sales of $542 million in the quarter, up 35.6% year over year. Tremfya recorded sales of $640 million in the quarter, up 8.4% year over year. New drug, Carvykti, a BCMA CAR-T therapy approved for relapsed or refractory multiple myeloma, recorded sales of $72 million. New drug, Spravato, approved for treatment-resistant depression, recorded sales of $131 million, up 86.9% year over year.
PAH revenues of $872 million rose 2.4% year over year. Xarelto sales rose 13.7% in the quarter to $578 million.
Invega Sustenna/Xeplion/Invega Trinza/Trevicta sales declined 0.4% to $1.04 billion in the quarter. Simponi/Simponi Aria sales declined 5.8% to $537 million, while Prezista sales decreased 4.8% to $477 million.
Zytiga sales declined 54.5% to $245 million in the quarter due to generic competition. Sales of Remicade were down 26.5% in the quarter to $487 million.
J&J’s single-dose COVID-19 vaccine generated sales of $747 million in the quarter, up 63.4% year over year. International sales accounted for all COVID-19 vaccine sales.
The MedTech segment sales came in at $7.48 billion, up 7.3% from the year-ago period, as an operational increase of 11% was offset by a negative currency movement of 3.7%. MedTech segment sales beat our estimate of $7.32 billion.
Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 6.4%. Abiomed, acquired last year, contributed 4.6% of sales growth. With the acquisition of Abiomed, the MedTech segment now has 12 platforms with more than $1 billion in annual sales.
The Consumer Health segment recorded revenues of $3.85 billion in the reported quarter, up 7.4% year over year, reflecting an 11.3% operational increase and a 3.9% negative currency impact. Consumer Health segment sales came ahead of our estimate of $3.640 million.
Excluding the impact of all acquisitions and divestitures and currency, on an adjusted operational basis, worldwide sales rose 11.3% worldwide, driven by over-the-counter products.
J&J plans to separate its Consumer Health segment into a new publicly-traded company called Kenvue. The separation is expected to be executed this year.
Ups 2023 Guidance
The company raised its previously issued financial guidance for 2023.
J&J raised its revenue guidance to a range of $97.9 billion to $98.9 billion from $96.9 billion to $97.9 billion. This guidance excludes any revenues from J&J’s COVID-19 vaccine. The Zacks Consensus Estimate is pegged at $97.62 billion. Revenue growth is now expected in the range of 5.5% – 6.5% versus the prior expectation of 4.5% – 5.5%.
Excluding the COVID-19 vaccine, operational constant-currency sales are expected to increase in the range of 5.5% – 6.5% versus the prior expectation of 4.5%-5.5%. Adjusted operational sales (excluding currency impact, acquisitions/divestitures) growth is now expected to be 4.5%-5.5% (prior expectation of 3.5%-4.5%).
The adjusted earnings per share guidance was raised from a range of $10.45 – $10.65 to $10.60 – $10.70 per share. The Zacks Consensus Estimate is pegged at $10.50 per share.
The earnings range indicates an increase of 4.5%-5.5% versus the prior expectation of 3%-5%. On an operational, constant-currency basis, adjusted earnings per share are expected to increase 3.5%-4.5% versus the prior expectation of 2.5%-4.5%.
Our Take
J&J kickstarted the earnings season for the drug and biotech sector by reporting strong first-quarter results. It beat estimates for earnings as well as sales. All three segments delivered a strong performance in the quarter, gaining from strong demand trends for its products.
J&J also announced a 5.3% increase in the quarterly dividend to $1.19 per share from $1.13 per share.
J&J’s shares were up more than 1% in pre-market trading in response to the upbeat results and guidance increase. In the past year, J&J’s shares have declined 9.5% against the industry’s 9.1% increase.
Image Source: Zacks Investment Research
J&J’s Pharma unit is performing at above-market levels, supported by blockbuster drugs, Darzalex and Stelara, and contributions from newer drugs. J&J is focusing on growing its MedTech unit through new products. However, macroeconomic headwinds like inflationary pressure and rising input costs are hurting margins. Headwinds like generic competition and pricing pressure continue. Stelara’s upcoming loss of exclusivity in 2023 is a concern. J&J has taken meaningful steps to resolve its talc and opioid litigation. Earlier this month, J&J offered to pay $8.9 billion over a period of 25 years to completely resolve its cosmetic talc litigation.
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.
Some better-ranked drugmakers/biotech companies are Novo Nordisk (NVO - Free Report) Innoviva (INVA - Free Report) and Sanofi (SNY - Free Report) . While Novo Nordisk has a Zacks Rank of 1, Innoviva and Sanofi have a Zacks Rank #2 (Buy).
Estimates for Novo Nordisk’s 2023 earnings per share have increased from $4.20 to $4.52 over the past 60 days. Estimates for 2024 have jumped from $4.90 per share to $5.26 in the same timeframe. Novo Nordisk’s stock has surged 49.5% in the past year.
Novo Nordisk beat earnings expectations in three of the trailing four quarters. The company delivered a four-quarter earnings surprise of 3.00%, on average.
Estimates for Sanofi’s earnings per share have increased from $4.40 to $4.41 over the past 60 days while that for 2024 have gone up from $4.86 per share to $4.89 per share. Sanofi’s stock has risen 1.2% in the past year.
Sanofi beat earnings expectations in three of the trailing four quarters. The company delivered a four-quarter earnings surprise of 7.68%, on average.
Estimates for Innoviva’s 2023 earnings per share have increased from $1.04 to $1.37. Estimates for 2024 have jumped from 52 cents per share to $1.25 in the past 60 days. Innoviva’s stock has declined 33.6% in the past year.
Innoviva missed earnings expectations in three of the trailing four quarters. The company delivered a four-quarter negative earnings surprise of 50.78%, on average.