U.S. Markets closed

J&J, Novartis' Q1 Earnings Impress: Will Others Follow Suit?

Zacks Equity Research
1 / 1

Snap (SNAP) Flat As Market Sinks: What You Should Know

Snap (SNAP) closed at $6.81 in the latest trading session, marking no change from the prior day.

Johnson & Johnson JNJ kicked off pharma earnings season on a strong note beating the Zacks Consensus Estimate for both earnings and sales in the first-quarter 2018. J&J’s performance was driven by continued positive momentum since the second half of 2017 and improvement in Consumer segment sales.

How Did J&J Perform in Q1?

J&J’s earnings of $2.06 per share beat the Zacks Consensus Estimate of $2.01. Quarterly revenues were $20 billion, which also beat the consensus mark of $19.48 billion. Buoyed by its strong performance, the company upped its previously issued sales outlook for 2018. (Read More: J&J Tops Q1 Earnings Estimates, Raises Sales Guidance).

J&J’s Pharmaceutical segment sales grew 19.4% year over year in the first quarter of 2018 due to strong sales in both domestic and international markets and favorable currency impact. Sales in the U.S. market rose 9.9% in the quarter while international sales grew 33.1%.

New products like Imbruvica (cancer) and Darzalex (multiple myeloma) continued to perform well. Oncology sales increased 45% during the quarter to $2.3 billion, constituting almost a quarter of the pharmaceutical sales. Core products like Xarelto, Stelara, Zytiga, Simponi/Simponi Aria and Invega Sustenna also contributed to growth. Imbruvica sales rose 43.5%. The drug is marketed by J&J in partnership with AbbVie, Inc. ABBV.

Edurant sales rose 40.9% while Prezista sales increased 11.2%.

However, Concerta sales continue to decline due to generic competition. Sales of Risperdal Consta also fell 5.3%. Sales of Invokana/Invokamet declined 12.7% due to higher managed care discounting, while blockbuster rheumatoid arthritis drug, Remicade, marketed in partnership with Merck & Co., Inc. MRK fell 16.9%.

J&J’s Pharma segment achieved some clinical milestones during the quarter including FDA approvals of prostate cancer drug, Erleada for the treatment of men with non-metastatic castration-resistant prostate cancer and line extension of already marketed prostate cancer drug, Zytiga in combination with prednisone in the first-line setting.

These will certainly boost sales in 2018. J&J now expects revenues in the range of $81.0 to $81.8 billion, higher than $80.6 billion to $81.4 billion expected previously.

Overall, in 2018, J&J expects the Pharmaceutical segment to remain strong while the Consumer and Medical Device segments will continue to improve. We expect other companies like Merck, Amgen, Inc. AMGN, Pfizer and Lilly to follow suit.

Novartis Reports Encouraging Q1 Results

Novartis AG NVS also reported this week. The Swiss pharma giant beat earnings and revenue estimates driven by strong performance of key drugs, Cosentyx and Entresto. Novartis reported core earnings of $1.28 per share, beating the Zacks Consensus Estimate of $1.25 and up from $1.13 recorded in the year-ago quarter. Revenues increased 10% to $12.7 billion, beating the Zacks Consensus Estimate of $12.3 billion. (Read more: Novartis Beats Earnings and Revenue Estimates in Q1)

Sales of the Innovative Medicines division grew 6% to $8.4 billion driven by volume growth of Cosentyx and Entresto. However, entry of generics for Gleevec in the United States and Europe impacted sales unfavorably.

Cosentyx sales increased to $580 million, up 35% driven strong growth in all indications and expanded access. Entresto’s sales increased 126% to $200 million driven by increased uptake.

Oncology franchise (excluding Gleevec) grew 6% driven by Promacta/Revolade, Tafinlar + Mekinist, Jakavi and recent launches. However, sales at the Sandoz division were $2.5 billion, down 4% due to price erosion in the Unites States.

However, this year so far, J&J’s shares have lost 8.8% and Novartis’ shares are down 6% against 4.3% decrease witnessed by the industry.

Will Other Pharma Bigwigs Report Solid Results Too?

Pfizer

Pfizer's top line is expected to be favorably impacted by new products like Xeljanz (rheumatoid arthritis) and Ibrance (breast cancer) as well as older products like Lyrica (neuropathic pain), Chantix (smoking cessation) and Eliquis (blood thinner) in the soon-to-be reported quarter. Moreover, line extension of Xeljanz, Sutent and Bosulif received in the fourth quarter of 2017 is also expected to bring in more sales.

However, loss of exclusivity and associated generic competition for Pristiq in the United States and Lyrica in Europe, and product shortages for legacy Hospira will likely affect sales negatively. Blockbuster drug Enbrel sales should continue to decline in the quarter due to biosimilar competition.

In 2018, the company’s sales are expected to increase in low single digits from 2017 levels. The Zacks Consensus Estimate for sales and earnings for Q1 is pegged at $13.03 billion and 73 cents, respectively. The Zacks Consensus Estimate for sales in 2018 currently stands at $54.52 billion, representing year-over-year growth of 3.7%. Pfizer carries a Zacks Rank #2 (Buy).

Merck

Merck’s blockbuster drug, Keytruda, along with Lynparza and Bridion Injection is expected to boost revenues in the first quarter. Keytruda sales are gaining momentum through approval and launch of Keytruda in new indications, especially in first-line lung cancer.

However, rising competitive and pricing pressure are expected to hurt sales of Zostavax, Zepatier, Januvia and Isentress.

Animal health franchise sales are likely to remain strong in the first quarter.

Merck carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for sales and earnings for Q1 is pegged at $10.11 billion and 99 cents, respectively. The Zacks Consensus Estimate for 2018 sales is $41.81 billion, representing a 4.2% year-over-year increase.

Eli Lilly (LLY)

Sales of Lilly’s diabetes drugs, Trulicity and Jardiance are expected to grow driven by market share gains. Other new drugs such as Cyramza, Taltz, and Lartruvo are also expected to boost the top line due to continued strong demand. Verzenio is also expected to generate higher sales in the first quarter.

However, patent expiry in some countries for Cymbalta, Strattera, Effient, Axiron, Zyprexa, Evista and competitive pressure mainly from immuno-oncology agents for Alimta will hurt sales of these drugs.

We expect strong uptake of new products to offset decline in sales of established products this quarter too.

The Zacks Consensus Estimate for sales and earnings for Q1 is pegged at $5.52 billion and $1.13, respectively. The Zacks Consensus Estimate for 2018 sales stands at $23.43 billion, representing a rise of 2.4% year over year. Lilly carries a Zacks Rank #2.

Bristol-Myers Squibb Company (BMY)

Several label expansions of Bristol-Myers’ blockbuster cancer drug, Opdivo, drove the company’s sales last year and is expected do so this year as well. Moreover, cardiovascular drug, Eliquis, also demonstrated strong performance in 2017. We expect this trend to continue this quarter. Label expansion of leukemia drug, Sprycel, approved in November 2017 should bring in more sales for the drug. Moreover, continued strong performance of Yervoy and Orencia will have a favorable impact.

However, genericization of Plavix, Avapro/Avalide and Baraclude in the United States due to loss of exclusivity is significantly hurting the company’s top line. The company also faces stiff competition in the immuno-oncology space. The HIV business continues to face competitive pressure.

The Zacks Consensus Estimate for sales and earnings for Q1 is pegged at $5.17 billion and 84 cents, respectively. The Zacks Consensus Estimate for 2018 sales is pegged at $21.69 billion, representing a rise of 12.7% year over year. Bristol Myers carries a Zacks Rank #3.

Conclusion

The new products of the majority of these companies are doing well and are expected to offset declining sales of legacy drugs due to loss of exclusivity. Moreover, most of these companies boast a deep and promising pipeline. Also, the new tax law boosts the prospects of strategic mergers and acquisitions and in-licensing deals/collaboration with smaller companies, which will strengthen the companies' product portfolio.

Wall Street’s Next Amazon

Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.

Click for details >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Novartis AG (NVS) : Free Stock Analysis Report
 
Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
 
AbbVie Inc. (ABBV) : Free Stock Analysis Report
 
Amgen Inc. (AMGN) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research

  • Can AMD Stock Go on a Bull Run Once Again?
    Business
    Motley Fool

    Can AMD Stock Go on a Bull Run Once Again?

    Advanced Micro Devices (NASDAQ: AMD) shares have fallen off a cliff over the past month, as investors are probably concerned about whether it can sustain its rally in the face of a fading tailwind and rising competition. The chipmaker has minted a lot of money thanks to cryptocurrency mining, but that catalyst is fizzling out and rival NVIDIA (NASDAQ: NVDA) has launched a new generation of graphics chips to reclaim its lost market share. AMD blames weak GPU sales to the cryptocurrency market for this slowdown, but recent developments indicate that it could easily surpass the low-balled guidance.

  • The ‘smart money’ says it’s time to buy the Chinese internet giants and the U.S. FAANGs
    News
    MarketWatch

    The ‘smart money’ says it’s time to buy the Chinese internet giants and the U.S. FAANGs

    When the media and investors turn negative on stocks but the “smart money” is bullish, it’s a good time to think about buying. After all, exactly what is the smart money, and how do you know? Lately, several fund managers who pass this test have been pounding the table on Chinese internet names.

  • Which Canadian Marijuana Stock Will Enjoy a Bigger Bump From Its NYSE Listing -- Aphria or Aurora?
    Business
    Motley Fool

    Which Canadian Marijuana Stock Will Enjoy a Bigger Bump From Its NYSE Listing -- Aphria or Aurora?

    Maybe Wall Street should be called "Weed Street." Big Canadian marijuana grower Canopy Growth listed its stock on the New York Stock Exchange (NYSE) earlier this year. Aurora Cannabis (NASDAQOTH: ACBFF) begins trading on the NYSE on Tuesday, Oct. 23. Aphria (NASDAQOTH: APHQF) filed last week to list its stock on the NYSE.

  • Say Goodbye to Amazon's Blockbuster Revenue Growth
    Business
    Motley Fool

    Say Goodbye to Amazon's Blockbuster Revenue Growth

    Throughout its history, Amazon (NASDAQ: AMZN) has possessed a certain ingenuity in finding new ways to grow. Just when the company seems to be maturing in one sector, it finds a new one to jump into. Since the company's early history, its quarterly revenue growth has cycled between 15% and 50%, depending on where it is in the growth cycles in the above businesses.

  • Don’t cheat yourself with the 4% rule
    Business
    MarketWatch

    Don’t cheat yourself with the 4% rule

    If you’re planning for retirement, you’re probably thinking about how much you’ll need, how long the money will last, and how much you can safely take out each year. You recognize that in retirement there will be a balancing act between spending on current needs while also preserving enough for your later years. Instead, all-too-often, retirees use simplified rules of thumb to determine how much to take out each year.

  • Rep. Gabbard on how US should respond to Khashoggi's death
    World
    Fox Business Videos

    Rep. Gabbard on how US should respond to Khashoggi's death

    Saudi prosecutors say 18 Saudis are being held as suspects in Jamal Khasoggi's death; reaction from Democratic Rep. Tulsi Gabbard.

  • This Warren Buffett Stock Is Dirt Cheap Right Now
    Business
    Motley Fool

    This Warren Buffett Stock Is Dirt Cheap Right Now

    Warren Buffett has amassed a large portfolio of bank stocks for Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) with major holdings in Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), and American Express (NYSE: AXP), just to name a few of the most well-known and largest investments. Synchrony is a major issuer of store-branded credit cards and also operates a rapidly growing online banking platform.

  • Better Buy: Ford Motor Company vs. General Motors
    Business
    Motley Fool

    Better Buy: Ford Motor Company vs. General Motors

    Both Ford Motor Company (NYSE: F) and General Motors (NYSE: GM) have been investor favorites in the not-too-distant past, and both pay good dividends. Ford has a slew of new products on the way, starting with a brand-new Ranger pickup early next year. Ford and GM have both had a rough year in the stock market.

  • 3 Dividend Stocks That Pay You More Than Coca-Cola Does
    Business
    Motley Fool

    3 Dividend Stocks That Pay You More Than Coca-Cola Does

    With a better than 50-year history of paying dividends, Coca-Cola (NYSE: KO) is seen as an icon of stable, strong, secure payouts. Although Coke and its dividend are not in trouble, there are better investments to be found. Three stocks that these Motley Fool contributors particularly like are Dominion Energy (NYSE: D), AbbVie (NYSE: ABBV), and MGM Growth Properties (NYSE: MGP).

  • Religious Extremists Got Their Justice. Now They're Going To Strip LGBTQ Rights.
    Politics
    HuffPost Opinion

    Religious Extremists Got Their Justice. Now They're Going To Strip LGBTQ Rights.

    While much of the country was in an uproar over the nomination (and confirmation) of Brett Kavanaugh to the U.S. Supreme Court, anti-LGBTQ religious extremists in Texas filed a federal lawsuit against the city of Austin targeting its anti-discrimination ordinance protecting LGBTQ people, claiming it infringes on their religious liberty. Like many municipalities and less than half of U.S. states, Austin protects gay, lesbian, bisexual and transgender people broadly from discrimination in housing, employment and public accommodations.

  • The PC Market Still Reigns Supreme for Intel
    Business
    Motley Fool

    The PC Market Still Reigns Supreme for Intel

    Chip giant Intel (NASDAQ: INTC) has talked a lot about its attempted transformation from a so-called "PC-centric" company to a "data-centric" company. Although Intel's PC-centric revenue has become a smaller part of the company's overall business, investors need to understand that Intel's financial performance still is significantly tied to the health of the PC market, as well as its ability to capitalize on that market.

  • Hate Taxes? 37 States Make Social Security Tax Free
    Business
    Motley Fool

    Hate Taxes? 37 States Make Social Security Tax Free

    Over the course of your career, you'll probably have tens of thousands of dollars in Social Security payroll taxes withheld from your paychecks. Workers are confident that by paying those taxes up front, they'll be able to collect Social Security benefits

  • 1 Top Stock to Buy Amid October’s Turbulent Market
    Business
    Motley Fool

    1 Top Stock to Buy Amid October’s Turbulent Market

    In the past three weeks alone, stocks have tumbled about 5%, which has many investors unnerved. One top option to consider amid the current turbulence is Magellan Midstream Partners (NYSE: MMP), which has lost more than 5% of its value in the past few weeks. Because of that, investors can get an even better starting price on one of the top master limited partnerships (MLPs), potentially setting themselves up to earn market-beating returns in the coming years.

  • Better Buy: Aurora Cannabis Inc. vs. Canopy Growth Corporation
    Business
    Motley Fool

    Better Buy: Aurora Cannabis Inc. vs. Canopy Growth Corporation

    Canadian marijuana producers have entered a new era. After several years of supplying medical marijuana nationwide, they have begun moving into Canada's recreational marijuana market, which opened on Oct. 17. Canopy's share price has soared three times higher than Aurora's has.

  • 3 Energy Stocks You Can Buy and Hold for the Next Decade
    Business
    Motley Fool

    3 Energy Stocks You Can Buy and Hold for the Next Decade

    North America needs to build $23 billion of new natural gas-related infrastructure annually through 2035, according to a recent report. Three of the best positioned to capture this growth are Kinder Morgan (NYSE: KMI), Williams Companies (NYSE: WMB), and TransCanada (NYSE: TRP), making them great stocks to buy and hold in the coming decade. Kinder Morgan is already the largest natural gas pipeline company in North America, operating roughly 70,000 miles of pipeline.

  • Business
    Benzinga

    Barron's Picks And Pans: Alibaba, Citizens Financial, FAANG Stocks And More

    This weekend's Barron's cover story shows why emerging markets may be ready to rebound. Other featured articles examine why stocks will rally in 2019 and how to play preferred stock as yields rise. Also: the prospects for Chinese internet giants and

  • How the Heck Did Netflix Stock Go Down Last Week?
    News
    Motley Fool

    How the Heck Did Netflix Stock Go Down Last Week?

    Everything seemed to go right for Netflix (NASDAQ: NFLX) last week. It has another hit on its hands with The Haunting of Hill House, an eight-part horror series based on Shirley Jackson's novel that has even won the praise of the immortal Stephen King. Netflix is killing it, but investors are unfortunately singing a different tune.

  • 3 Warren Buffett Stocks Worth Buying Now
    Business
    Motley Fool

    3 Warren Buffett Stocks Worth Buying Now

    Known as the Oracle of Omaha, Warren Buffett has collected both an incredible investment record and a deservedly vast following among investors of all types. Every move he makes is scrutinized in the hope of gleaning  wisdom from his investment choices.

  • Business
    Benzinga

    Bulls & Bears Of The Week: Apple, Disney, Ford, Home Depot And More

    Benzinga has featured looks at many investor favorite stocks over the past week. Bullish calls included leaders in entertainment, tobacco and video games. Bearish calls included a Detroit automaker and big box retailer. Last week began with a mystery

  • 3 Reasons Alibaba Stock Could Rise
    Business
    Motley Fool

    3 Reasons Alibaba Stock Could Rise

    After reaching an all-time high of $211.70 in June, Alibaba (NYSE: BABA) shares have shed nearly a third of their value as fears of an escalating trade war between China and the U.S. rattled investors. China's e-commerce market will grow to $1.8 trillion by 2022, according to Forrester, up from $1.1 trillion this year. With only 38% of China's 1.4 billion people currently making purchases online, this massive market is set to grow briskly for many years to come.

  • Here's Which Marijuana Stocks Investors Are Betting Against the Most
    Business
    Motley Fool

    Here's Which Marijuana Stocks Investors Are Betting Against the Most

    Canada's recreational marijuana market is now open for business. Some are confident enough that certain marijuana stocks will fall that they're putting a lot of money on the line expecting that's exactly what will happen. The marijuana grower's low stock float and wild swings over the last month have received a lot of attention.

  • A Reduced Payout Could Be Coming for These 3 High-Yield Dividend Stocks
    Business
    Motley Fool

    A Reduced Payout Could Be Coming for These 3 High-Yield Dividend Stocks

    The bull market has been churning higher for nearly 10 years now as the S&P 500 has more than quadrupled since the market bottom in 2009. Investors in some high-yield dividend stocks may be worried about a payout cut, especially with rising interest rates making bonds more appealing. Let's take a closer look at three high-yield dividend stocks that could see a reduced payout.

  • Sears Holdings Hopes to Live On After Bankruptcy. Here's Why It Won't
    Business
    Motley Fool

    Sears Holdings Hopes to Live On After Bankruptcy. Here's Why It Won't

    The bankruptcy filing everyone saw coming finally arrived. Sears Holdings (NASDAQ: SHLD) announced early Monday morning it was seeking Chapter 11 protection and had arranged financing that would allow it to keep operating, at least through Christmas. While other businesses have reorganized and emerged successfully while under the protection of the bankruptcy courts, including retailers like Payless ShoeSource, True Religion, and Gymboree, don't expect the same of Sears.

  • A Glimpse of How Netflix Sees the Future
    Business
    Motley Fool

    A Glimpse of How Netflix Sees the Future

    Streaming pioneer Netflix (NASDAQ: NFLX) found itself back in investors' good graces when the company reported its third-quarter results on Oct. 16. There were a number of gems hidden among the financial metrics that may be of interest to shareholders, as they shed light on how Netflix views the world and the future of its business. One of the biggest concerns cited by Netflix bears is the mounting debt and ongoing cash burn the company uses to finance its growing library of original content.

  • Procter & Gamble Finally Has Some Good News for Investors
    Business
    Motley Fool

    Procter & Gamble Finally Has Some Good News for Investors

    It has taken some time, but Procter & Gamble (NYSE: PG) shareholders are finally seeing improving results out of the consumer products titan. P&G paired that positive revenue news with an uptick in profitability, too. P&G's expansion rate sped up significantly, with help from strong sales volumes and steady pricing.