J&J (JNJ) to Start Q3 Earnings Season for Pharma Sector
Johnson & Johnson JNJ is slated to report third-quarter 2022 results on Oct 18, before market open. In the last reported quarter, the company delivered an earnings surprise of 0.78%.
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 3.41%, on average.
Johnson & Johnson Price, Consensus and EPS Surprise
Johnson & Johnson price-consensus-eps-surprise-chart | Johnson & Johnson Quote
J&J’s stock has lost 4.9% this year so far compared with a decline of 4.7% for the industry.
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Factors to Consider
J&J’s Pharma segment is expected to have contributed to the top line led by increased penetration and market share gains of key products such as Darzalex and Stelara.
The Zacks Consensus Estimate for Darzalex and Stelara is pegged at $2.01 billion and $2.66 billion, respectively.
Other core products like Invega Sustenna and new drugs, Erleada and Tremfya, might have also contributed significantly to sales growth. Its COVID-19 vaccine sales improved in the second quarter after a lower-than-expected contribution in the first quarter. International sales accounted for most of the COVID-19 vaccine sales. We expect the improvement to have continued in the third quarter.
However, lower sales of its key medicine, Imbruvica is 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 the key drug, Imbruvica. The Zacks Consensus Estimate for Imbruvica is $985 million.
Generic/biosimilar competition for drugs like Zytiga, Procrit/Eprex and Remicade is likely to have hurt the top line.
The Zacks Consensus Estimate for J&J’s Pharmaceuticals unit is $13.8 billion.
With regard to the MedTech segment, sales in the second half are expected to have been better than the first, driven by continued recovery in worldwide procedure volumes, better execution and uptake from recently launched products. The fourth quarter is expected to be stronger than the third. The Zacks Consensus Estimate for J&J’s MedTech segment is $6.78 billion.
In the Consumer Healthcare segment, external supply constraints (due to raw material availability and labor shortages) and inflationary pressure are likely to have continued to hurt sales of the skin health franchise. However, supply disruptions are expected to have been lower than the second quarter. The lower disruptions coupled with strategic price increases should lead to better growth than the second quarter. The above-market growth in the over-the-counter medicines business, seen in the previous quarters, is likely to have continued in the third quarter.
The Zacks Consensus Estimate for J&J’s Consumer Healthcare segment is $3.70 billion.
J&J expects supply constraints, inflationary pressure and rising input costs to continue to hurt margins in the second half of 2022 as well as in 2023
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 -0.05%. The Zacks Consensus Estimate is pegged at $2.57 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 #3
Stocks to Consider
Here are some large drug stocks that have the right combination of elements to beat on earnings this time around:
Eli Lilly LLY has an Earnings ESP of +1.69% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Lilly’s stock has risen 17.5% this year so far. Lilly missed earnings estimates in three of the last four quarters. Lilly has a four-quarter earnings negative surprise of 5.11%, on average. LLY is scheduled to release its third-quarter 2022 results on Nov 1.
Biogen BIIB has an Earnings ESP of +1.15% and a Zacks Rank #3.
Biogen’s stock has declined 5.7% this year so far. Biogen topped earnings estimates in three of the last four quarters and has a four-quarter earnings surprise of 6.88%, on average. BIIB is scheduled to release its third-quarter 2022 results on Oct 25.
Bayer BAYRY has an Earnings ESP of +4.49% and a Zacks Rank #3.
Bayer’s stock has declined 10.2% this year so far. Bayer topped earnings estimates in all the last four quarters. Bayer has a four-quarter earnings surprise of 19.90%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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