Categories Analysis, Health Care

Johnson & Johnson to publish Q2 report next week. Here’s what to look for

For the second quarter, analysts forecast a double-digit fall in sales and a more modest drop in earnings

Healthcare conglomerate Johnson & Johnson (NYSE: JNJ) has constantly strengthened its portfolio over the years by acquiring new businesses, investing in new therapies, and expanding into new markets. The company’s second-quarter financial report is slated for release next week, with experts predicting a modest outcome.

The performance of Johnson & Johnson’s stock has been lackluster since it peaked about two years ago. The stock stayed in a downward spiral throughout last year, and the weakness extended into 2024. It has lost about 8% in the past twelve months. The positive aspect of the price drop is that JNJ has become more affordable, opening up an opportunity for a broader range of investors to invest in one of the largest Wall Street companies. The management has raised the dividend consistently for more than six decades now, with the latest being the 4.2% hike announced a few months ago.

Q2 Report Due

After entering fiscal 2024 on a high note, the pharma giant is getting ready to publish its second-quarter results on Wednesday, July 17, at 6:20 am ET. The average earnings estimate of analysts following the company is $2.50 per share for Q2, excluding one-off items, vs. $2.56 per share in the prior year period. Sales are seen falling 19.3% year-over-year to $20.59 billion.

Joe Wolk, the company’s CEO, said at the Q1 earnings call, “We anticipate Innovative Medicine sales growth to be slightly stronger in the first half of the year compared to the second half given the anticipated entry of Stelara biosimilars in Europe midyear. For MedTech, we expect operational sales growth to be relatively consistent throughout the year. Looking ahead, we have many important catalysts in the pipeline that will drive meaningful near- and long-term growth across both Innovative Medicine and MedTech.”

Q1 Outcome

In the first three months of FY24, sales at the core Innovative Medicine business edged up 1% year-over-year and MedTech sales grew 4.5%. At $21.4 billion, total sales were up 2%, which translated into a 12% increase in adjusted earnings to $2.71 per share. Quarterly earnings have beaten estimates almost every quarter for more than a decade. The company invested around $3.5 billion in research and development in Q1, which represents about 17% of its sales.

For the whole of 2024, JNJ executives forecast sales in the range of $88.0 billion to $88.4 billion, compared to $85.2 billion a year earlier. Full-year adjusted profit is expected to grow about 7% to $10.65 per share, which is the mid-point of the $10.57-$10.72 per share guidance range.

Deals

Recently, the company signed an agreement to acquire medical device maker Shockwave Medical as part of expanding its cardiovascular portfolio. The deal comes on the heels of completing the acquisition of Ambrx, which develops engineered biologics using a genetic code technology platform, in a move aimed at strengthening the oncology portfolio.

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