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Johnson & Johnson (JNJ - Free Report) set the ball rolling for the pharma and medical device manufacturer space’s second-quarter 2023 earnings on Jul 20, before the opening bell. The world's biggest healthcare products’ maker continued with its long streak of earnings beat. It topped the revenue estimate as well as lifted the full-year outlook.
Driven by solid results, JNJ shares climbed 6% on the day. Investors seeking to tap the strength should consider ETFs having the largest allocation to this diversified drug maker. These include iShares U.S. Pharmaceuticals ETF (I(HE - Free Report) , Health Care Select Sector SPDR Fund (XLV - Free Report) , iShares U.S. Healthcare ETF (IYH - Free Report) , First Trust Nasdaq Pharmaceuticals ETF (FTXH - Free Report) and Vanguard Health Care ETF (VHT - Free Report) .
Earnings per share came in at $2.80, beating the Zacks Consensus Estimate of $2.61 and improving 8.1% from the year-ago quarter. Revenues grew 6.3% year over year to $25.5 billion and edged past the Zacks Consensus Estimate of $24.7 billion (see:all the Healthcare ETFs here).
The company is benefiting from a rebound in demand for nonurgent surgeries among older adults, who deferred those procedures during the COVID-19 pandemic.
For 2023, Johnson & Johnson lifted the revenue guidance to $98.80-$99.80 billion from the previous outlook of $97.9-$98.9 billion. It also raised the earnings per share guidance to $10.70-$10.80 from the previous outlook of $10.60-$10.70. The Zacks Consensus Estimate is pegged at $98.90 for revenues and $10.65 for earnings per share. The solid outlook is driven by the strength in its medical devices business and demand for its cancer drugs such as Darzalex.
iShares U.S. Pharmaceuticals ETF (IHE)
iShares U.S. Pharmaceuticals ETF provides exposure to 40 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 $369.8 million in AUM and charges 39 bps in fees and expenses. Volume is lower as it exchanges about 6,000 shares a day. The fund has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
Health Care Select Sector SPDR Fund is the most popular healthcare ETF and follows the Health Care Select Sector Index. It holds 65 securities in its basket, with JNJ taking the second spot at 8.3% of the assets. Pharma and healthcare providers and services take the largest share at 29.7% and 22.1% share, respectively. From a sector look, healthcare equipment and supplies, biotech, and life sciences tools & services have double-digit exposure each.
Health Care Select Sector SPDR Fund manages $40.2 billion in its asset base and trades in a heavy volume of around 9 million shares. The expense ratio comes in at 0.10%. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
iShares U.S. Healthcare ETF offers exposure to 117 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, Johnson and Johnson is the second firm, accounting for 7.9% of the total assets. In terms of industrial exposure, pharma takes the top spot at 29.4%, followed by healthcare equipment (20.6%) and biotech (17.2%).
iShares U.S. Healthcare ETF has amassed $3.2 billion in its asset base, while charging 39 bps in annual fees. It trades in a moderate volume of around 44,000 shares a day and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: 4 Top-Ranked Sector ETFs to Buy in the Second Half).
First Trust Nasdaq Pharmaceuticals ETF offers exposure to U.S. companies within the pharmaceuticals industry and tracks the Nasdaq US Smart Pharmaceuticals Index. It holds 46 securities in its basket, with JNJ occupying the top spot at 7.5% of the assets. FTXH has a lower AUM of $24.8 million and an average daily volume of 12,000 shares.
First Trust Nasdaq Pharmaceuticals ETF charges 60 bps in annual fees and has a Zacks ETF Rank #4 (Sell).
Vanguard Health Care ETF tracks the MSCI US Investable Market Health Care 25/50 Index and holds 418 stocks in its basket. Of these, JNJ takes the second spot with a 7.4% allocation. Pharma takes the largest share at 28%, while healthcare equipment and biotech round off the top three spots.
Vanguard Health Care ETF is also one of the most popular and liquid ETFs, with AUM of $17 billion and an average daily volume of about 194,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #1 with a Medium risk outlook.
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5 ETFs to Buy on JNJ's Q2 Earnings Strength
Johnson & Johnson (JNJ - Free Report) set the ball rolling for the pharma and medical device manufacturer space’s second-quarter 2023 earnings on Jul 20, before the opening bell. The world's biggest healthcare products’ maker continued with its long streak of earnings beat. It topped the revenue estimate as well as lifted the full-year outlook.
Driven by solid results, JNJ shares climbed 6% on the day. Investors seeking to tap the strength should consider ETFs having the largest allocation to this diversified drug maker. These include iShares U.S. Pharmaceuticals ETF (I(HE - Free Report) , Health Care Select Sector SPDR Fund (XLV - Free Report) , iShares U.S. Healthcare ETF (IYH - Free Report) , First Trust Nasdaq Pharmaceuticals ETF (FTXH - Free Report) and Vanguard Health Care ETF (VHT - Free Report) .
Earnings per share came in at $2.80, beating the Zacks Consensus Estimate of $2.61 and improving 8.1% from the year-ago quarter. Revenues grew 6.3% year over year to $25.5 billion and edged past the Zacks Consensus Estimate of $24.7 billion (see:all the Healthcare ETFs here).
The company is benefiting from a rebound in demand for nonurgent surgeries among older adults, who deferred those procedures during the COVID-19 pandemic.
For 2023, Johnson & Johnson lifted the revenue guidance to $98.80-$99.80 billion from the previous outlook of $97.9-$98.9 billion. It also raised the earnings per share guidance to $10.70-$10.80 from the previous outlook of $10.60-$10.70. The Zacks Consensus Estimate is pegged at $98.90 for revenues and $10.65 for earnings per share. The solid outlook is driven by the strength in its medical devices business and demand for its cancer drugs such as Darzalex.
iShares U.S. Pharmaceuticals ETF (IHE)
iShares U.S. Pharmaceuticals ETF provides exposure to 40 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 $369.8 million in AUM and charges 39 bps in fees and expenses. Volume is lower as it exchanges about 6,000 shares a day. The fund has a Zacks ETF Rank #3 (Hold) with a High risk outlook.
Health Care Select Sector SPDR Fund (XLV - Free Report)
Health Care Select Sector SPDR Fund is the most popular healthcare ETF and follows the Health Care Select Sector Index. It holds 65 securities in its basket, with JNJ taking the second spot at 8.3% of the assets. Pharma and healthcare providers and services take the largest share at 29.7% and 22.1% share, respectively. From a sector look, healthcare equipment and supplies, biotech, and life sciences tools & services have double-digit exposure each.
Health Care Select Sector SPDR Fund manages $40.2 billion in its asset base and trades in a heavy volume of around 9 million shares. The expense ratio comes in at 0.10%. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.
iShares U.S. Healthcare ETF (IYH - Free Report)
iShares U.S. Healthcare ETF offers exposure to 117 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, Johnson and Johnson is the second firm, accounting for 7.9% of the total assets. In terms of industrial exposure, pharma takes the top spot at 29.4%, followed by healthcare equipment (20.6%) and biotech (17.2%).
iShares U.S. Healthcare ETF has amassed $3.2 billion in its asset base, while charging 39 bps in annual fees. It trades in a moderate volume of around 44,000 shares a day and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: 4 Top-Ranked Sector ETFs to Buy in the Second Half).
First Trust Nasdaq Pharmaceuticals ETF (FTXH - Free Report)
First Trust Nasdaq Pharmaceuticals ETF offers exposure to U.S. companies within the pharmaceuticals industry and tracks the Nasdaq US Smart Pharmaceuticals Index. It holds 46 securities in its basket, with JNJ occupying the top spot at 7.5% of the assets. FTXH has a lower AUM of $24.8 million and an average daily volume of 12,000 shares.
First Trust Nasdaq Pharmaceuticals ETF charges 60 bps in annual fees and has a Zacks ETF Rank #4 (Sell).
Vanguard Health Care ETF (VHT - Free Report)
Vanguard Health Care ETF tracks the MSCI US Investable Market Health Care 25/50 Index and holds 418 stocks in its basket. Of these, JNJ takes the second spot with a 7.4% allocation. Pharma takes the largest share at 28%, while healthcare equipment and biotech round off the top three spots.
Vanguard Health Care ETF is also one of the most popular and liquid ETFs, with AUM of $17 billion and an average daily volume of about 194,000 shares. It charges 10 bps in annual fees and has a Zacks ETF Rank #1 with a Medium risk outlook.