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J&J (JNJ) Q1 Earnings May Indicate Coronavirus Impact on Pharma – Yahoo Finance


Johnson & Johnson JNJ will report first-quarter 2020 results on Apr 14, before market open. In the last reported quarter, the company delivered a positive earnings surprise of 1.08%.

The healthcare bellwether’s performance has been pretty impressive, with the company exceeding earnings expectations in each of the trailing four quarters. The company has a four-quarter positive earnings surprise of 4.29%, on average.

Johnson & Johnson Price and EPS Surprise

 

Johnson & Johnson Price and EPS Surprise

 

 

 

 

 

 

 

Johnson & Johnson price-eps-surprise | Johnson & Johnson Quote

J&J’s stock has declined 1.8% this year so far compared with a decrease of 9.6% for the industry.

 

Factors to Consider

J&J’s Pharma segment has been putting up an above-market performance despite currency headwinds and the impact of biosimilar and generic competition on sales of some key drugs like Zytiga, Remicade, Procrit/Eprex. Please note that J&J markets Remicade in partnership with Merck MRK. J&J’s oncology drugs, Imbruvica and Darzalex as well as psoriasis treatment, Stelara are likely to have driven sales growth in the Pharmaceuticals segment in the first quarter due to increased penetration and new indications. However, generic/biosimilar headwinds might reflect on the Pharma unit’s sales.

Sales at J&J’s Medical Devices unit declined sequentially in the fourth quarter while that in the Consumer segment improved slightly. It remains to be seen if first-quarter Consumer and Medical Device units’ sales have improved when the company reports.

The Zacks Consensus Estimate for J&J’s Pharmaceuticals, Consumer and Medical Device segments is $10.73 billion, $3.4 billion and $6.47 billion, respectively.

Importantly, on the first-quarter earnings call, investors will be keen to know about any updates on J&J’s business outlook for 2020 to include the impact of coronavirus. There is a concern about supply chain disruptions, caused by the outbreak, hurting drug/biotech companies’ first-half earnings

Meanwhile, with half of the world under a lockdown, completion of clinical studies and regulatory reviews has been delayed, which could further delay drug approvals and launches. Investors will look for any such updates from J&J.

On the investor call, management is likely to face questions about talc and opioid litigation issues.

J&J faces around 18,000 lawsuits for its talc-based products, primarily its baby powders. The lawsuits allege that its talc products contain asbestos, which caused many women to develop ovarian cancer

J&J also faces thousands of other lawsuits related to abuse of its opioid-based drugs. These lawsuits claim that J&J is one of the several companies whose opioid-based drugs were responsible for fueling the state’s opioid epidemic.

Key Recent Development

J&J announced in March that it has identified a lead vaccine candidate for COVID-19 and expects to begin phase I human clinical studies on the same by September. J&J also announced a new partnership with BARDA and committed to provide global supply of more than one billion doses of a vaccine. J&J sounded confident of having the first batch of COVID-19 vaccine available for emergency use authorization by early 2021. Meanwhile, J&J has committed to invest more than $1 billion to co-fund vaccine research, development, and clinical testing along with BARDA.

In addition to the vaccine development efforts, J&J is also working with BARDA and other partners to screen Janssen’s compounds with antiviral activity to identify potential treatments against the novel coronavirus. 

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for J&J this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate of $1.99 and the Zacks Consensus Estimate of $2.11, is -5.75%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: J&J has a Zacks Rank #4 (Sell).

Stocks to Consider

Here are some large drug stocks that have the right combination of elements to beat on earnings this time around:

Eli Lilly & Company LLY with an Earnings ESP of +8.91% and a Zacks Rank #1. The company is scheduled to release results on Apr 23. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pfizer PFE has an Earnings ESP of +13.55% and a Zacks Rank #3. The company is scheduled to release results on Apr 28.

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Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
Pfizer Inc. (PFE) : Free Stock Analysis Report
 
Merck & Co., Inc. (MRK) : Free Stock Analysis Report
 
Eli Lilly and Company (LLY) : Free Stock Analysis Report
 
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