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Should You Buy, Sell or Hold J&J Stock Ahead of Q4 Earnings?
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Key Takeaways
The Zacks Consensus Estimate for JNJ Q4 sales and earnings is $22.5 billion and $2.01 per share, respectively.
JNJ's performance has impressed, as the company exceeded earnings expectations the past four quarters.
In the past year, JNJ stock has declined 9.5% compared with a decrease of 5.4% for the industry.
Johnson & Johnson (JNJ - Free Report) will report its fourth-quarter and full-year earnings on Jan. 22. The Zacks Consensus Estimate for fourth-quarter sales and earnings is pegged at $22.54 billion and $2.01 per share, respectively. The Zacks Consensus Estimate for J&J’s earnings has risen from $9.93 per share to $9.95 per share for 2024 but has declined from $10.54 per share to $10.50 per share for 2025 over the past 60 days.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
JNJ Estimate Movement
Image Source: Zacks Investment Research
JNJ’s Earnings Surprise 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 4.15%, on average. In the last reported quarter, the company delivered an earnings surprise of 9.01%.
Image Source: Zacks Investment Research
JNJ’s Stock Price & EPS Surprise
J&J has an Earnings ESP of +4.99% and a Zacks Rank #3 (Hold), indicating a likely positive surprise. Per our proven model, companies with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 have a good chance of delivering an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Factors Shaping JNJ’s Upcoming Results
Sales in J&J’s Innovative Medicines segment are expected to have been driven by higher sales of key products such as Darzalex, Tremfya and Erleada due to strong market growth and share gains.
For Darzalex, the consensus mark is pegged at $3.04 billion, while our model estimates sales of $3.06 billion.
The Zacks Consensus Estimate for Tremfya is $1.06 billion, while our model estimate is $1.09 billion.
The Zacks Consensus Estimate for Erleada sales is $793.8 million, while our model projects sales to be $805.0 million.
Other products like Invega Sustenna, Uptravi and Opsumit are likely to have witnessed growth. The rapid adoption of new drugs like Carvykti, Tecvayli, Talvey and Spravato are likely to have contributed to top-line growth.
Sales of key drug Stelara declined in the third quarter as market growth was offset by unfavorable patient mix and share loss primarily due to European biosimilar entrants. A biosimilar version of Stelara was launched in certain European markets for certain indications in July 2024.
Several biosimilar versions of Stelara are expected to be launched in the United States in 2025. Amgen (AMGN - Free Report) launched the first Stelara biosimilar, Wezlana, in January 2025. However, Amgen’s biosimilar launch is unlikely to have had an impact on Stelara’s sales in the fourth quarter of 2024.
The Zacks Consensus Estimate for Stelara sales is pegged at $2.35 billion, while our model projects sales of $2.21 billion.
Imbruvica sales are likely to have declined due to rising competitive pressure in the United States due to new oral competition. The Zacks Consensus Estimate for Imbruvica is $719 million, while our model indicates sales to be $710.1 million.
Sales of Xarelto and Simponi/Simponi Aria are likely to have declined. 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 Innovative Medicine unit is $14.28 billion, while our estimate is $14.1 billion.
In the third quarter, MedTech segment sales were hurtby continued headwinds in Asia Pacific, specifically in China. Sales in China were hurt by the impact of the volume-based procurement (VBP) program and the anti-corruption campaign. VBP is a government-driven cost-containment effort in China. Competitive pressure is also hurting sales growth in some MedTech businesses.
J&J does not expect any improvement in its business in the Asia Pacific region, specifically in China, in the fourth quarter of 2024. However, new product uptake and commercial execution are expected to boost growth in other markets in the MedTech segment.
The Zacks Consensus Estimate for J&J’s MedTech segment is $8.28 billion, while our model estimate is $8.23 billion.
Nonetheless, a single quarter’s results are not so important for long-term investors. Let us delve deeper to understand whether to buy, sell or hold J&J’s stock.
JNJ’s Stock Price Performance & Valuation
In the past year, J&J’s stock has declined 9.5% compared with a decrease of 5.4% for the industry. The stock has also underperformed the sector as well as the S&P 500, as seen in the chart below.
From a valuation standpoint, J&J appears attractive relative to the industry and is trading below its 5-year mean. Going by the price/earnings ratio, the company shares currently trade at 13.95 forward earnings, lower than 15.29 for the industry and the stock’s mean of 16.02.
JNJ Stock Valuation
Image Source: Zacks Investment Research
J&J’s biggest strength is its diversified business model. With last year’s complete separation of the Consumer Health segment into a newly listed company called Kenvue (KVUE - Free Report) , J&J has now become a two-sector company focused on the Pharmaceutical and MedTech fields.
J&J’s Innovative Medicines segment is showing a growth trend. The company has an interesting R&D pipeline that can generate innovative products and drive its growth further. It recently completed acquisitions of Shockwave and V-Wave in MedTech and Ambrx, Proteologix and NM26 bispecific antibody in Innovative Medicine, thus boosting its pipeline.
In January, J&J announced a definitive agreement to acquire Intra-Cellular Therapies for $132.00 per share or approximately $14.6 billion. The acquisition will add Intra-Cellular Therapies only approved drug, Caplyta, for the treatment of bipolar I and II depression and schizophrenia to J&J’s neuroscience pipeline. The acquisition will also add Intra-cellular Therapeutics’ other CNS candidates, including ITI-1284, being developed for generalized anxiety disorder and Alzheimer’s disease-related psychosis and agitation, to JNJ’s pipeline.
However, slow sales of J&J’s MedTech segment, the upcoming patent expiration of its blockbuster drug, Stelara, and talc-related legal issues are some of J&J’s main concerns.
J&J faces more than 62,000 lawsuits for its talc-based products, primarily baby powders. The lawsuits allege that its talc products contain asbestos, which caused many women to develop ovarian cancer.
Overall, J&J’s outlook for 2025 looks positive. In its Innovative Medicine segment, growth is expected to be driven by its key products such as Darzalex, Tremfya, Erleada and others, as well as new drugs and new indications for Tremfya and Rybrevant. In MedTech, J&J expects operational sales growth to be at the upper end of its long-term (2022-2027) guided range of 5-7%, driven by the launch of new products and contributions from Abiomed and Shockwave acquisitions.
Stay Invested in J&J’s Stock
No matter how the fourth-quarter results play out, those who already own this company’s shares may stay invested for some time as the visibility for a potential resolution of the talc lawsuits has improved, and J&J looks optimistic for a better performance in 2025. Investors with a long-term horizon may consider buying J&J’s stock at the rock-bottom price and valuation.
Image: Bigstock
Should You Buy, Sell or Hold J&J Stock Ahead of Q4 Earnings?
Key Takeaways
Johnson & Johnson (JNJ - Free Report) will report its fourth-quarter and full-year earnings on Jan. 22. The Zacks Consensus Estimate for fourth-quarter sales and earnings is pegged at $22.54 billion and $2.01 per share, respectively. The Zacks Consensus Estimate for J&J’s earnings has risen from $9.93 per share to $9.95 per share for 2024 but has declined from $10.54 per share to $10.50 per share for 2025 over the past 60 days.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
JNJ Estimate Movement
JNJ’s Earnings Surprise 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 4.15%, on average. In the last reported quarter, the company delivered an earnings surprise of 9.01%.
JNJ’s Stock Price & EPS Surprise
J&J has an Earnings ESP of +4.99% and a Zacks Rank #3 (Hold), indicating a likely positive surprise. Per our proven model, companies with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 have a good chance of delivering an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Factors Shaping JNJ’s Upcoming Results
Sales in J&J’s Innovative Medicines segment are expected to have been driven by higher sales of key products such as Darzalex, Tremfya and Erleada due to strong market growth and share gains.
For Darzalex, the consensus mark is pegged at $3.04 billion, while our model estimates sales of $3.06 billion.
The Zacks Consensus Estimate for Tremfya is $1.06 billion, while our model estimate is $1.09 billion.
The Zacks Consensus Estimate for Erleada sales is $793.8 million, while our model projects sales to be $805.0 million.
Other products like Invega Sustenna, Uptravi and Opsumit are likely to have witnessed growth. The rapid adoption of new drugs like Carvykti, Tecvayli, Talvey and Spravato are likely to have contributed to top-line growth.
Sales of key drug Stelara declined in the third quarter as market growth was offset by unfavorable patient mix and share loss primarily due to European biosimilar entrants. A biosimilar version of Stelara was launched in certain European markets for certain indications in July 2024.
Several biosimilar versions of Stelara are expected to be launched in the United States in 2025. Amgen (AMGN - Free Report) launched the first Stelara biosimilar, Wezlana, in January 2025. However, Amgen’s biosimilar launch is unlikely to have had an impact on Stelara’s sales in the fourth quarter of 2024.
The Zacks Consensus Estimate for Stelara sales is pegged at $2.35 billion, while our model projects sales of $2.21 billion.
Imbruvica sales are likely to have declined due to rising competitive pressure in the United States due to new oral competition. The Zacks Consensus Estimate for Imbruvica is $719 million, while our model indicates sales to be $710.1 million.
Sales of Xarelto and Simponi/Simponi Aria are likely to have declined. 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 Innovative Medicine unit is $14.28 billion, while our estimate is $14.1 billion.
In the third quarter, MedTech segment sales were hurtby continued headwinds in Asia Pacific, specifically in China. Sales in China were hurt by the impact of the volume-based procurement (VBP) program and the anti-corruption campaign. VBP is a government-driven cost-containment effort in China. Competitive pressure is also hurting sales growth in some MedTech businesses.
J&J does not expect any improvement in its business in the Asia Pacific region, specifically in China, in the fourth quarter of 2024. However, new product uptake and commercial execution are expected to boost growth in other markets in the MedTech segment.
The Zacks Consensus Estimate for J&J’s MedTech segment is $8.28 billion, while our model estimate is $8.23 billion.
Nonetheless, a single quarter’s results are not so important for long-term investors. Let us delve deeper to understand whether to buy, sell or hold J&J’s stock.
JNJ’s Stock Price Performance & Valuation
In the past year, J&J’s stock has declined 9.5% compared with a decrease of 5.4% for the industry. The stock has also underperformed the sector as well as the S&P 500, as seen in the chart below.
JNJ Stock Underperforms Industry, Sector & S&P 500
From a valuation standpoint, J&J appears attractive relative to the industry and is trading below its 5-year mean. Going by the price/earnings ratio, the company shares currently trade at 13.95 forward earnings, lower than 15.29 for the industry and the stock’s mean of 16.02.
JNJ Stock Valuation
J&J’s biggest strength is its diversified business model. With last year’s complete separation of the Consumer Health segment into a newly listed company called Kenvue (KVUE - Free Report) , J&J has now become a two-sector company focused on the Pharmaceutical and MedTech fields.
J&J’s Innovative Medicines segment is showing a growth trend. The company has an interesting R&D pipeline that can generate innovative products and drive its growth further. It recently completed acquisitions of Shockwave and V-Wave in MedTech and Ambrx, Proteologix and NM26 bispecific antibody in Innovative Medicine, thus boosting its pipeline.
In January, J&J announced a definitive agreement to acquire Intra-Cellular Therapies for $132.00 per share or approximately $14.6 billion. The acquisition will add Intra-Cellular Therapies only approved drug, Caplyta, for the treatment of bipolar I and II depression and schizophrenia to J&J’s neuroscience pipeline. The acquisition will also add Intra-cellular Therapeutics’ other CNS candidates, including ITI-1284, being developed for generalized anxiety disorder and Alzheimer’s disease-related psychosis and agitation, to JNJ’s pipeline.
However, slow sales of J&J’s MedTech segment, the upcoming patent expiration of its blockbuster drug, Stelara, and talc-related legal issues are some of J&J’s main concerns.
J&J faces more than 62,000 lawsuits for its talc-based products, primarily baby powders. The lawsuits allege that its talc products contain asbestos, which caused many women to develop ovarian cancer.
Overall, J&J’s outlook for 2025 looks positive. In its Innovative Medicine segment, growth is expected to be driven by its key products such as Darzalex, Tremfya, Erleada and others, as well as new drugs and new indications for Tremfya and Rybrevant. In MedTech, J&J expects operational sales growth to be at the upper end of its long-term (2022-2027) guided range of 5-7%, driven by the launch of new products and contributions from Abiomed and Shockwave acquisitions.
Stay Invested in J&J’s Stock
No matter how the fourth-quarter results play out, those who already own this company’s shares may stay invested for some time as the visibility for a potential resolution of the talc lawsuits has improved, and J&J looks optimistic for a better performance in 2025. Investors with a long-term horizon may consider buying J&J’s stock at the rock-bottom price and valuation.
You can see the complete list of today’s Zacks #1 Rank stocks here.