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JNJ Posts Mixed Q3 Bag, Ups View: ETFs in Focus

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Johnson & Johnson JNJ set the ball rolling for the pharma and medical device manufacturer space’s third-quarter 2021 earnings on Oct 20, before the opening bell. The world's biggest healthcare products’ maker continued its long streak of earnings beat but lagged the revenue estimates. The company lifted its full-year guidance.

Earnings per share came in at $2.60, beating the Zacks Consensus Estimate of $2.37 and improving 18.2% from the year-ago quarter. Revenues grew 10.7% year over year to $23.3 billion but fell short of the Zacks Consensus Estimate of $23.6 billion. The solid performance was driven by strength in Pharmaceuticals, the ongoing recovery in Medical Devices, and strong growth in Consumer Health.

The company brought in $502 million in worldwide sales of its COVID-19 vaccine in Q3. With this, JNJ raked in a total of $766 million in sales of its COVID-19 shot so far this year and aims to fetch $2.5 billion in sales by the end of the year. More than half of the sales is expected to be realized in the fourth quarter (read: ETFs to Play as Merck Shares Surge on COVID Treatment News).

For 2021, Johnson & Johnson raised its revenue range from $93.8-$94.6 billion to $94.1-$94.6 billion, indicating year-over-year increase of 13.9-14.5%. Earnings per share guidance range has been revised up from $9.60-$9.70 to $9.77-$9.82, representing year-over-year growth of 21.7-22.3%. The Zacks Consensus Estimate is pegged at $94.2 billion for revenues and $2.22 for earnings per share.

Following the results, JNJ shares rose 2.3% on the day. The stock currently has a Zacks Rank #3 (Hold) and Value Score of B.

ETFs in Focus

Given this, investors should closely watch the movement of the stock and ETFs having the largest allocation to this diversified drug maker. We have highlighted them below (see: all the Healthcare ETFs here).

iShares U.S. Pharmaceuticals ETF IHE

This ETF provides exposure to 47 companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index. Of these, Johnson and Johnson takes the top spot, accounting for 22.2% share. The product has $369 million in AUM and charges 42 bps in fees and expenses. Volume is lower as it exchanges about 6,000 shares a day. The fund has a Zacks ETF Rank #3 with a High risk outlook.

iShares Evolved U.S. Innovative Healthcare ETF IEIH

This actively managed ETF employs data science techniques to identify companies with exposure to the innovative healthcare sector. Holding 249 stocks in its basket, JNJ is the top firm with a 9.3% allocation. The product has accumulated $41.5 million in its asset base and trades in a meager volume of 6,000 shares per day on average. It charges 18 bps in annual fees (read: Take a Look at the Top-Performing Biotech ETFs YTD).

Simplify Health Care ETF PINK

This product seeks long-term capital appreciation by providing investors with multi-cap exposure to groundbreaking and innovative companies in biotech, medtech, gene therapy, and other fast growing health care related sectors. It holds 52 stocks in its basket with JNJ taking the top spot at 9.1% share. PINK debuted in the space on Oct 7 and trades in an average daily volume of 34,000 shares. It charges 50 bps in fees per year.

Health Care Select Sector SPDR Fund XLV

The most-popular healthcare ETF, XLV follows the Health Care Select Sector Index. This fund manages nearly $30 billion in its asset base and trades in a heavy volume of around 11 million shares. Expense ratio comes in at 0.12%. In total, the fund holds 64 securities in its basket, with JNJ taking the top spot, accounting for 8.7% of the assets. Healthcare equipment and supplies and pharma accounts for at least 27.6% share each from a sector look, while healthcare providers and services, and biotech round off the next spots with a double-digit exposure each. The product has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

iShares U.S. Healthcare ETF IYH

This fund offers exposure to 116 securities by tracking the Russell 1000 Health Care RIC 22.5/45 Capped Gross Index. Here again, Johnson & Johnson dominates the fund’s returns with 8.1% of the total assets. In terms of industrial exposure, pharma takes the top spot at 26.3%, followed by healthcare equipment (25.8%) and biotech (16.3%). The product has amassed nearly $2.9 billion in its asset base and charges 41 bps in annual fees. It trades in a good volume of around 68,000 shares a day and has a Zacks ETF Rank #1 with a Medium risk outlook (read: 4 Defensive Sector ETFs to Protect Your Portfolio).


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Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
Health Care Select Sector SPDR ETF (XLV): ETF Research Reports
 
iShares U.S. Healthcare ETF (IYH): ETF Research Reports
 
iShares U.S. Pharmaceuticals ETF (IHE): ETF Research Reports
 
iShares Evolved U.S. Innovative Healthcare ETF (IEIH): ETF Research Reports
 
Simplify Health Care ETF (PINK): ETF Research Reports
 
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