Johnson & Johnson (JNJ) reported better-than-anticipated fiscal 2024 second-quarter results. Despite a 4.30% year-on-year increase in topline, the company’s bottom line fell by roughly 13% on one-time charges. The drug manufacturer slashed its FY 2024 adjusted earnings view but upwardly revised its operational sales guidance to primarily mirror the takeover of Shockwave Medical.
The stock of J&J ended Thursday’s trading session at $155.42, down $1.16, or 0.74%, from the prior close. J&J’s stock has been on a decline so far this year due to investor concerns about the decreasing sales of the anti-inflammatory medication Stelara, which will encounter lower-priced competition in the US and Europe shortly. Additionally, the company is dealing with ongoing litigation from individuals alleging that its talc-based infant powder induced their cancers.
The New Brunswick, New Jersey-based company reported second-quarter revenues of $22.45 billion, up 4.30% from $21.52 billion in the comparable quarter of fiscal 2023.
During the quarter, operational sales rose by 6.60%. Likewise, adjusted operational sales increased by 6.50%. Excluding the COVID-19 vaccine, J&J’s adjusted operational growth was 7.10% in 2Q 2024.
For the latest quarter, Johnson & Johnson posted net income of $4.69 billion, a decrease of 12.80% from $5.38 billion last year. On a per-share basis, the company’s earnings fell by 6% to $1.93, from $2.05 per share.
Excluding charges, the company’s 2Q 2024 adjusted earnings were $6.84 billion, or $2.82 per share, an increase from $6.73 billion, or $2.56 per share, in 2Q 2023.
Analysts surveyed by LSEG had anticipated J&J to report earnings of $2.70 per share on revenues of $22.31 billion.
Region-wise:
- US revenues rose by 7.80% y-o-y to $12.50 billion.
- International revenues were $9.80 billion, up 0.20% from last year.
Segment wise:
- Innovative medicine sales grew by 5.50% to $14.49 billion in Q2 2024, aided by Darzalex (a blood cancer drug). The division recorded operational sales growth of 7.80%. Excluding COVID-19 drug, operational sales of the Innovative medicine segment increased by 8.80% year-on-year.
- Medtech revenues rose by 2.20% to $7.96 billion. On an operational basis, the division’s revenues grew by 4.40%.
The company has pinned its hopes on a cancer and autoimmune disease drug to mitigate the loss of revenue from Stelara.
Looking ahead, J&J maintained its FY 2024 revenue outlook in the range of $88 billion to $88.40 billion, with the midpoint being $88.20 billion. The outlook translates to a growth rate of between 4.70% and 5.20%.
Additionally, the company now projects FY 2024 operational sales to be in the range of $89.20 billion to $89.60 billion. Earlier, J&J had forecast operational sales in the range of between $88.70 billion and $89.10 billion. The latest operational sales guidance translates to a growth of 6.10% to 6.60%, an increase from the earlier growth view of 5.50% to 6%.
Johnson & Johnson now anticipates FY 2024 adjusted earnings in the range of $9.97 to $10.07 per share, reflecting an annual growth of between 0.50% and 1.50%. The company’s earlier guidance was $10.57 to $10.72 per share, translating to a growth of 6.60% to 8.10%.
The FY 2024 adjusted operational earnings are now expected to be between $10 and $10.10 per share, representing a growth of 0.80% to 1.80%. Previously, J&J had issued earnings per share guidance of $10.60 to $10.75, reflecting a growth of 6.90% to 8.40%. The downward revision was attributed to a string of acquisitions made recently by the company.
The company’s recent acquisitions encompass a $13.10 billion buyout of Shockwave Medical, a devices firm; an $850 million all-cash takeover of Proteologix, a biotech specializing in bispecific antibodies; and a $1.25 billion acquisition of an experimental bispecific antibody targeting atopic dermatitis from Numab Therapeutics.
Wall Street analysts are expecting Johnson & Johnson to report FY 2024 earnings of $10.01 per share on sales of $88.74 billion.
J&J proposes a $6 billion settlement for talc claims over 25 years, requiring 75% claimant approval by July 26. The company is cautiously optimistic about the settlement’s approval.
The company further stated that its board has approved the third-quarter cash dividend of $1.24 per share, payable on September 10.
The quarterly earnings beat and downwardly revised EPS outlook are expected to keep the stock of J&J range-bound in the short term.
The historical price chart indicates that the stock of J&J is gaining ground after testing support at $150. The next resistance is anticipated to be only near $160. Additionally, the stock is trading above its 50-day moving average, while the MACD indicator is showing a positive reading. Therefore, we anticipate J&J’s stock to rally further in the days ahead.
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