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J&J (JNJ) Updates 2023 Guidance After Final Kenvue Separation
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Johnson & Johnson (JNJ - Free Report) provided an updated financial guidance for 2023, following the complete separation of its Consumer Health segment as a new publicly-traded company called Kenvue (KVUE - Free Report) . J&J also updated its first-half financials.
In May 2023, J&J spun off its Consumer Health segment into a new listed company called Kenvue, which began trading on the New York Stock Exchange with effect from May 4. J&J owned 89.6% of total outstanding shares of Kenvue’s common stock and was the majority shareholder. This month, J&J made an exchange offer for shares of Kenvue that it owned to complete the separation. After completion of the exchange offer, J&J now has a 9.5% stake (approximately 180 million shares) in Kenvue’s common stock, which it may monetize in a tax-efficient manner in 2024. J&J generated $13.2 billion in cash proceeds following the Kenvue debt offering and initial public offering.
With the complete separation of the Consumer Health segment, J&J has become a two-sector company focused on the Pharmaceutical and MedTech fields. Kenvue will now operate as a separate and fully independent company.
J&J will present its Consumer Health business as discontinued operations in its financial statements, including a tax-free gain of approximately $20 billion in the third quarter of 2023
J&J’s stock has declined 7.3% so far this year against an increase of 8.1% for the industry.
Image Source: Zacks Investment Research
Following the separation of the Consumer Health unit, while J&J lowered its earnings and sales guidance ranges on an absolute basis, it expects better growth rates than previously expected. The company also maintained its dividend.
J&J now expects revenues in the range of $83.2 billion-$84.0 billion compared with the earlier expectation of $98.8 billion to $99.8 billion. This new guidance excludes any revenues from the Consumer Health segment and now reflects sales from only the Pharmaceutical and MedTech units. Revenue growth is now expected in the range of 7%-8% compared with the prior expectation of 6.5%-7.5%. All revenue figures exclude any revenues from the COVID-19 vaccine sales.
Operational constant-currency sales are expected to increase in the range of 7.5%-8.5% compared with the prior expectation of 7%-8%. Adjusted operational sales (excluding currency impact, acquisitions/divestitures) growth is now expected to be 6.2%-7.2% (prior expectation of 6%-7%).
The adjusted earnings per share guidance was lowered from a range of $10.70-$10.80 to $10.00-$10.10.
However, the earnings range implies growth in the range of 12%-13%, which is higher than the prior expectation of 5.5%-6.5%. On an operational, constant-currency basis, adjusted earnings per share are expected to increase 11%-12% versus the prior expectation of 4.5%-5.5%.
With the completion of the Kenvue exchange offer, the share count was lowered by 191 million shares or 24% of the shares of J&J common stock that were tendered in exchange for approximately 1.5 billion shares of Kenvue common stock that J&J owned. As a result, J&J’s outstanding share count was reduced by approximately 7%.
The updated adjusted EPS guidance for 2023 reflects only a partial-year benefit of approximately 73.5 million shares or 28 cents benefit out of the approximately 191 million net share reduction in J&J shares outstanding from the exchange offer.
Adjusted pretax operating margin is now expected to improve approximately 50 basis points from 2022 levels versus the prior expectation of a slight improvement, driven by a better margin profile and mix.
Other income is expected to be in the range of $1.7 billion to $1.9 billion compared with the prior expectation of $1.6 billion to $1.8 billion due to the de-consolidation of J&J’s non-controlling interest in Kenvue. Net interest income is expected in the range of $100 to $200 million.
Adjusted tax rate guidance was lowered from a range of 15.5% to 16.5% to 15.0%-16.0%. J&J continues to expect to pay a dividend of $1.19 per share, which represents an annual yield of 2.9%.
Estimates Alaunos Therapeutics’ 2023 and 2024 bottom lines have narrowed from a loss of 16 cents to 15 cents and from a loss of 15 cents to 14 cents, respectively, over the past 60 days.
TCRT’s earnings beat estimates in two of the trailing four quarters while being in line in the other two, delivering an average surprise of 30.56%. Shares of TCRT have declined 77% year to date.
In the past 60 days, the Zacks Consensus Estimate for Corcept’s 2023 earnings per share has gone up from 62 cents to 78 cents. The consensus estimate for Corcept’s 2024 earnings per share has also improved from 61 cents to 83 cents. Shares of CORT have climbed 61.7% so far this year.
CORT’s earnings beat estimates in two of the trailing four quarters and missed the mark in the other two, delivering an average surprise of 6.99%.
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J&J (JNJ) Updates 2023 Guidance After Final Kenvue Separation
Johnson & Johnson (JNJ - Free Report) provided an updated financial guidance for 2023, following the complete separation of its Consumer Health segment as a new publicly-traded company called Kenvue (KVUE - Free Report) . J&J also updated its first-half financials.
In May 2023, J&J spun off its Consumer Health segment into a new listed company called Kenvue, which began trading on the New York Stock Exchange with effect from May 4. J&J owned 89.6% of total outstanding shares of Kenvue’s common stock and was the majority shareholder. This month, J&J made an exchange offer for shares of Kenvue that it owned to complete the separation. After completion of the exchange offer, J&J now has a 9.5% stake (approximately 180 million shares) in Kenvue’s common stock, which it may monetize in a tax-efficient manner in 2024. J&J generated $13.2 billion in cash proceeds following the Kenvue debt offering and initial public offering.
With the complete separation of the Consumer Health segment, J&J has become a two-sector company focused on the Pharmaceutical and MedTech fields. Kenvue will now operate as a separate and fully independent company.
J&J will present its Consumer Health business as discontinued operations in its financial statements, including a tax-free gain of approximately $20 billion in the third quarter of 2023
J&J’s stock has declined 7.3% so far this year against an increase of 8.1% for the industry.
Image Source: Zacks Investment Research
Following the separation of the Consumer Health unit, while J&J lowered its earnings and sales guidance ranges on an absolute basis, it expects better growth rates than previously expected. The company also maintained its dividend.
J&J now expects revenues in the range of $83.2 billion-$84.0 billion compared with the earlier expectation of $98.8 billion to $99.8 billion. This new guidance excludes any revenues from the Consumer Health segment and now reflects sales from only the Pharmaceutical and MedTech units. Revenue growth is now expected in the range of 7%-8% compared with the prior expectation of 6.5%-7.5%. All revenue figures exclude any revenues from the COVID-19 vaccine sales.
Operational constant-currency sales are expected to increase in the range of 7.5%-8.5% compared with the prior expectation of 7%-8%. Adjusted operational sales (excluding currency impact, acquisitions/divestitures) growth is now expected to be 6.2%-7.2% (prior expectation of 6%-7%).
The adjusted earnings per share guidance was lowered from a range of $10.70-$10.80 to $10.00-$10.10.
However, the earnings range implies growth in the range of 12%-13%, which is higher than the prior expectation of 5.5%-6.5%. On an operational, constant-currency basis, adjusted earnings per share are expected to increase 11%-12% versus the prior expectation of 4.5%-5.5%.
With the completion of the Kenvue exchange offer, the share count was lowered by 191 million shares or 24% of the shares of J&J common stock that were tendered in exchange for approximately 1.5 billion shares of Kenvue common stock that J&J owned. As a result, J&J’s outstanding share count was reduced by approximately 7%.
The updated adjusted EPS guidance for 2023 reflects only a partial-year benefit of approximately 73.5 million shares or 28 cents benefit out of the approximately 191 million net share reduction in J&J shares outstanding from the exchange offer.
Adjusted pretax operating margin is now expected to improve approximately 50 basis points from 2022 levels versus the prior expectation of a slight improvement, driven by a better margin profile and mix.
Other income is expected to be in the range of $1.7 billion to $1.9 billion compared with the prior expectation of $1.6 billion to $1.8 billion due to the de-consolidation of J&J’s non-controlling interest in Kenvue. Net interest income is expected in the range of $100 to $200 million.
Adjusted tax rate guidance was lowered from a range of 15.5% to 16.5% to 15.0%-16.0%. J&J continues to expect to pay a dividend of $1.19 per share, which represents an annual yield of 2.9%.
Zacks Rank & Stocks to Consider
J&J has a Zacks Rank #2 (Buy).
Johnson & Johnson Price and Consensus
Johnson & Johnson price-consensus-chart | Johnson & Johnson Quote
Some drug/biotech stocks worth considering are Alaunos Therapeutics (TCRT - Free Report) and Corcept Therapeutics (CORT - Free Report) , with the same Zacks Rank as J&J. You can see the complete list of today’s Zacks #1 Rank stocks (Strong Buy) here.
Estimates Alaunos Therapeutics’ 2023 and 2024 bottom lines have narrowed from a loss of 16 cents to 15 cents and from a loss of 15 cents to 14 cents, respectively, over the past 60 days.
TCRT’s earnings beat estimates in two of the trailing four quarters while being in line in the other two, delivering an average surprise of 30.56%. Shares of TCRT have declined 77% year to date.
In the past 60 days, the Zacks Consensus Estimate for Corcept’s 2023 earnings per share has gone up from 62 cents to 78 cents. The consensus estimate for Corcept’s 2024 earnings per share has also improved from 61 cents to 83 cents. Shares of CORT have climbed 61.7% so far this year.
CORT’s earnings beat estimates in two of the trailing four quarters and missed the mark in the other two, delivering an average surprise of 6.99%.