Johnson & Johnson (JNJ:NASDAQ)

Last update - 21 July 2023 By James Woods

Johnson & Johnson (JNJ) is a current holding within the value component of Rivkin’s US growth portfolio, with shares in the healthcare giant surging overnight following Q2 earnings results.

Shares climbed 6.1% on Thursday after the company raised the full-year adjusted earnings per share forecast. The EPS outlook has been revised to range between $10.70 and $10.80, an upgrade from the previous forecast of $10.60 to $10.70. The company also updated its full-year sales projection from the initial $97.9 billion to $98.9 billion to a revised estimate of $98.8 billion to $99.8 billion.

J&J’s solid Q2 results exceeded market expectations with an adjusted EPS of $2.80, outpacing the analyst estimates of $2.62. The company posted robust sales of $25.53 billion, surpassing estimates of $24.67 billion with a revenue breakdown revealing strong performance across the pharmaceutical, consumer healthcare, and MedTech sectors. Notably, Stelara, a top-selling psoriasis drug, surpassed estimates with sales of $2.8 billion. Additionally, the company intends to split off Kenvue shares, the consumer group in which JNJ owns 90%, via an exchange offer as a key step towards the separation, contingent on market conditions which could come as soon as the next few days.

Also buoying optimism from investors was news that Stelara’s, a top-selling psoriasis drug (a long-term inflammatory disease) patent life would be extended, staving off cheaper competition for longer than expected. The improved outlook was the year was also supported by a strong rebound in medical procedures in the U.S., driving growth in the company’s devices business.

The raised full-year adjusted earnings per share and sales forecasts, along with the planned separation of Kenvue shares, have driven optimism among investors. Despite potential headwinds, including looming competition for its blockbuster drug, Stelara, and ongoing litigation related to its talc products, the firm is confident in its robust strategic position. Thanks to the impressive performance of its pharmaceutical, consumer healthcare, and MedTech sectors, as well as the anticipated sustained demand for medical procedures post-Covid-19, J&J’s outlook remains optimistic, underpinning its firm foothold in the healthcare sector.


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