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JNJ shares slip on cautious outlook

AInvestWednesday, Jul 17, 2024 9:05 am ET
1min read

Johnson & Johnson (JNJ) reported strong Q2 2024 earnings, with an adjusted EPS of $2.82, surpassing the consensus of $2.71. Revenue for the quarter rose 4.3% year-over-year to $22.45 billion, also beating the consensus estimate of $22.33 billion. Despite these positive results, J&J lowered its FY24 EPS guidance to a range of $9.97 to $10.07 from the previous range of $10.57 to $10.72, citing the impact of recent acquisitions. The company reaffirmed its FY24 revenue guidance of $88.0 to $88.4 billion.

JNJ’s Innovative Medicine segment showed robust growth, with worldwide operational sales, excluding the COVID-19 Vaccine, increasing by 8.8%. This growth was driven by strong performances from oncology drugs such as DARZALEX (daratumumab) and ERLEADA (apalutamide), immunology drugs TREMFYA (guselkumab) and STELARA (ustekinumab), and the neuroscience drug SPRAVATO (esketamine). Including the COVID-19 Vaccine, the segment's sales grew by 7.8%. The company’s pharma unit overall saw a 5.5% sales increase to $14.49 billion, surpassing the expected $14.08 billion.

The MedTech segment posted sales of $7.96 billion, slightly below the estimate of $8.22 billion, but still showing a 2.2% year-over-year increase. Growth in this segment was primarily driven by electrophysiology products, Abiomed in Cardiovascular, and wound closure products in General Surgery. However, this was not enough to meet market expectations, reflecting some challenges within the segment.

Several key drugs in J&J’s portfolio had notable performances. DARZALEX revenue grew 18.4% to $2.88 billion, slightly above the estimate of $2.84 billion. ERLEADA revenue increased to $736 million, beating the estimate of $694 million, and TREMFYA revenue surged 28% year-over-year to $906 million, exceeding the estimate of $856.5 million. However, IMBRUVICA revenue fell 8.4% year-over-year to $770 million, though it still beat the estimate of $760.9 million.

Guidance for FY24 reflects some cautious optimism. J&J expects operational sales between $89.2 billion and $89.6 billion, up from the previous range of $88.7 billion to $89.1 billion. However, the adjusted EPS guidance was lowered to account for the impact of recent acquisitions, such as Shockwave Medical and Proteologix, as well as the NM26 Bispecific Antibody. This adjusted EPS guidance stands at $9.97 to $10.07, down from the prior $10.57 to $10.72, aligning with the consensus estimate of $10.01.

CEO Joaquin Duato emphasized the company’s strong foundation for future growth, driven by a robust pipeline, upcoming regulatory milestones for RYBREVANT and TREMFYA, and the integration of new acquisitions. He also highlighted the expansion of newly launched products, including ACUVUE OASYS MAX 1-Day contact lenses and the VARIPULSE platform. Despite the lowered EPS guidance, JNJ shares were slightly up 0.12% in premarket trading, indicating investor confidence in the company’s long-term growth potential.

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