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J&J (JNJ) to Report Q3 Earnings, Its First After Unit Spin-Off
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Johnson & Johnson (JNJ - Free Report) will report third-quarter 2023 results on Oct 17, before market open. In the last reported quarter, the company delivered an earnings surprise of 7.28%.
Factors to Consider
In May 2023, J&J spun off its Consumer Health segment into a newly listed company called Kenvue, which began trading on the New York Stock Exchange with effect from May 4. J&J owned 89.6% of the total outstanding shares of Kenvue’s common stock then and was the majority shareholder. In August, 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.
With the complete separation of the Consumer Health segment, J&J has now become a two-sector company focused on the Pharmaceutical and MedTech fields. Kenvue now operates as a separate and fully independent company. The third-quarter results will be the first quarterly update for the new J&J after the Consumer Health spin-off.
J&J’s Pharma segment is expected to have contributed to the top line, led by higher sales of key products such as Darzalex, Stelara, Tremfya and Erleada. J&J announced on the second-quarter conference call that sales growth in the Pharma unit in the second half could be slightly higher than the first half.
The Zacks Consensus Estimate for Stelara is $2.64 billion, while our model estimates are pegged at $2.65 billion.
The Zacks Consensus Estimate for Darzalex is $2.54 billion, while our model estimate is $2.57 billion.
The Zacks Consensus Estimate for Tremfya is $801 million, while our model estimate is $867.9 million.
The Zacks Consensus Estimate for Erleada is $660.0 million, while our model estimate is $614.3 million.
Importantly, new drugs like Carvykti, a BCMA CAR-T therapy approved for relapsed or refractory multiple myeloma, and Spravato, approved for treatment-resistant depression, are likely to have contributed to top-line growth.
However, like the previous few quarters, lower sales of its key medicine, Imbruvica, are likely to have hurt the top line in the third quarter. Rising competitive pressure in the United States from novel oral agents is likely to have hurt sales of Imbruvica. The Zacks Consensus Estimate for Imbruvica is $771.0 million, while our estimate is $759.0 million.
Generic/biosimilar competition for drugs like Zytiga and Remicade is likely to have hurt the top line.
The Zacks Consensus Estimate for J&J’s Pharmaceuticals unit is $13.37 billion, while our estimate is $13.27 billion.
In the MedTech segment, J&J expects continued recovery in worldwide procedure volumes, improvement in supply levels and uptake from new products to drive sales in the third and fourth quarters. J&J, back in July, had said that it expects relatively stable procedure volumes and health care staffing levels through the second half of 2023, with normal seasonality. However, the impact of the volume-based procurement issues in China and potential headwinds from international sanctions in Russia are expected to be higher in the third and the fourth quarters than in the first half of the year.
The Zacks Consensus Estimate for J&J’s MedTech segment is $7.59 billion, while our model estimate is $7.70 billion.
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.
Earnings Suprise History
The healthcare bellwether’s performance has been pretty impressive, with the company exceeding earnings expectations in each of the trailing four quarters. It delivered a four-quarter earnings surprise of 5.58%, on average.
J&J’s stock has declined 11.5% year to date against an increase of 8.2% for the industry.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for J&J this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Earnings ESP: J&J’s Earnings ESP is +0.20% as the Zacks Consensus Estimate of $2.52 per share is lower than the Most Accurate Estimate of $2.53 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: J&J has a Zacks Rank #4 (Sell).
Stocks to Consider
Here are some large drug/biotech stocks that have the right combination of elements to beat on earnings this time around:
AstraZeneca’s stock has risen 0.5% so far this year. AstraZeneca beat earnings estimates in the last four quarters. AZN has a four-quarter positive earnings surprise of 8.38%, on average. AstraZeneca is scheduled to release its third-quarter results on Nov 9.
Regeneron Pharmaceuticals (REGN - Free Report) has an Earnings ESP of +2.50% and a Zacks Rank #3.
Regeneron Pharmaceuticals’ stock has risen 16.3% year to date. Regeneron Pharmaceuticals topped earnings estimates in the last four quarters. REGN has a four-quarter positive earnings surprise of 14.23%, on average. REGN is scheduled to release its third-quarter results on Nov 2.
Moderna (MRNA - Free Report) has an Earnings ESP of +152.5% and a Zacks Rank #3.
Moderna’s stock has declined 43.9% so far this year. The company beat earnings estimates in two of the last four quarters while missing in the other two. MRNA has a four-quarter earnings surprise of 19.29%, on average. MRNA is scheduled to release its third-quarter results on Nov 2.
Image: Bigstock
J&J (JNJ) to Report Q3 Earnings, Its First After Unit Spin-Off
Johnson & Johnson (JNJ - Free Report) will report third-quarter 2023 results on Oct 17, before market open. In the last reported quarter, the company delivered an earnings surprise of 7.28%.
Factors to Consider
In May 2023, J&J spun off its Consumer Health segment into a newly listed company called Kenvue, which began trading on the New York Stock Exchange with effect from May 4. J&J owned 89.6% of the total outstanding shares of Kenvue’s common stock then and was the majority shareholder. In August, 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.
With the complete separation of the Consumer Health segment, J&J has now become a two-sector company focused on the Pharmaceutical and MedTech fields. Kenvue now operates as a separate and fully independent company. The third-quarter results will be the first quarterly update for the new J&J after the Consumer Health spin-off.
J&J’s Pharma segment is expected to have contributed to the top line, led by higher sales of key products such as Darzalex, Stelara, Tremfya and Erleada. J&J announced on the second-quarter conference call that sales growth in the Pharma unit in the second half could be slightly higher than the first half.
The Zacks Consensus Estimate for Stelara is $2.64 billion, while our model estimates are pegged at $2.65 billion.
The Zacks Consensus Estimate for Darzalex is $2.54 billion, while our model estimate is $2.57 billion.
The Zacks Consensus Estimate for Tremfya is $801 million, while our model estimate is $867.9 million.
The Zacks Consensus Estimate for Erleada is $660.0 million, while our model estimate is $614.3 million.
Importantly, new drugs like Carvykti, a BCMA CAR-T therapy approved for relapsed or refractory multiple myeloma, and Spravato, approved for treatment-resistant depression, are likely to have contributed to top-line growth.
However, like the previous few quarters, lower sales of its key medicine, Imbruvica, are likely to have hurt the top line in the third quarter. Rising competitive pressure in the United States from novel oral agents is likely to have hurt sales of Imbruvica. The Zacks Consensus Estimate for Imbruvica is $771.0 million, while our estimate is $759.0 million.
Generic/biosimilar competition for drugs like Zytiga and Remicade is likely to have hurt the top line.
The Zacks Consensus Estimate for J&J’s Pharmaceuticals unit is $13.37 billion, while our estimate is $13.27 billion.
In the MedTech segment, J&J expects continued recovery in worldwide procedure volumes, improvement in supply levels and uptake from new products to drive sales in the third and fourth quarters. J&J, back in July, had said that it expects relatively stable procedure volumes and health care staffing levels through the second half of 2023, with normal seasonality. However, the impact of the volume-based procurement issues in China and potential headwinds from international sanctions in Russia are expected to be higher in the third and the fourth quarters than in the first half of the year.
The Zacks Consensus Estimate for J&J’s MedTech segment is $7.59 billion, while our model estimate is $7.70 billion.
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.
Earnings Suprise History
The healthcare bellwether’s performance has been pretty impressive, with the company exceeding earnings expectations in each of the trailing four quarters. It delivered a four-quarter earnings surprise of 5.58%, on average.
Johnson & Johnson Price and EPS Surprise
Johnson & Johnson price-eps-surprise | Johnson & Johnson Quote
J&J’s stock has declined 11.5% year to date against an increase of 8.2% for the industry.
Image Source: Zacks Investment Research
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for J&J this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.
Earnings ESP: J&J’s Earnings ESP is +0.20% as the Zacks Consensus Estimate of $2.52 per share is lower than the Most Accurate Estimate of $2.53 per share. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: J&J has a Zacks Rank #4 (Sell).
Stocks to Consider
Here are some large drug/biotech stocks that have the right combination of elements to beat on earnings this time around:
AstraZeneca (AZN - Free Report) has an Earnings ESP of +5.43% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
AstraZeneca’s stock has risen 0.5% so far this year. AstraZeneca beat earnings estimates in the last four quarters. AZN has a four-quarter positive earnings surprise of 8.38%, on average. AstraZeneca is scheduled to release its third-quarter results on Nov 9.
Regeneron Pharmaceuticals (REGN - Free Report) has an Earnings ESP of +2.50% and a Zacks Rank #3.
Regeneron Pharmaceuticals’ stock has risen 16.3% year to date. Regeneron Pharmaceuticals topped earnings estimates in the last four quarters. REGN has a four-quarter positive earnings surprise of 14.23%, on average. REGN is scheduled to release its third-quarter results on Nov 2.
Moderna (MRNA - Free Report) has an Earnings ESP of +152.5% and a Zacks Rank #3.
Moderna’s stock has declined 43.9% so far this year. The company beat earnings estimates in two of the last four quarters while missing in the other two. MRNA has a four-quarter earnings surprise of 19.29%, on average. MRNA is scheduled to release its third-quarter results on Nov 2.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.