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Johnson & Johnson Long

by SignalFactory   ·  January 25, 2021 | 10:21:17 UTC  

Johnson & Johnson Long

by SignalFactory   ·  January 25, 2021 | 10:21:17 UTC  

Johnson & Johnson (JNJ) will report fourth-quarter and full-year 2020 results on Jan 26, before the market open. In the last reported quarter, the company delivered an earnings surprise of 10.55%.

The healthcare bellwether’s performance has been impressive, with the company exceeding earnings expectations in each of the trailing four quarters. The company has a four-quarter earnings surprise of 9.07%, on average.

Johnson & Johnson’s stock has risen 9.3% in the past year compared with an increase of 6.1% for the industry.

Factors to Consider:

Johnson & Johnson’s Pharma segment is expected to have continued to outperform the market led by increased penetration and new indications across key products such as Darzalex, Imbruvica, Stelara, and Erleada. Improved trends in prescription volumes and physician office visits may have aided sales in the fourth quarter. However, the impact of rising cases of COVID-19 infections on new patients starts with some physician-administered drugs that need to be seen. Johnson & Johnson markets Imbruvica in partnership with AbbVie ABBV.

The Zacks Consensus Estimate for Imbruvica, Darzalex, and Stelara is pegged at $1.08 billion, $1.16 billion, and $2.0 billion, respectively.

Importantly, sales of the key new drug, Tremfya declined sequentially in the third quarter due to the negative impact of COVID-19 and investments in rebates offered to enhance access. It remains to be seen if sales trends improved in the fourth quarter.

Moreover, sales of some other key drugs like Xarelto and Invokana/Invokamet improved in the third quarter after declining in the past few quarters. It remains to be seen if the positive trend continued in the fourth quarter. Generic/biosimilar competition to drugs like Zytiga and Remicade is likely to have hurt the top line.

The Zacks Consensus Estimate for the Pharmaceutical segment is $11.6 billion.

As far as the Medical Devices segment is concerned, the pandemic hit this segment the hardest due to a widespread decline in elective surgical procedures. However, in the third quarter, the segment benefited from better-than-expected market recovery amid faster-than-expected ramping up of medical procedures. In the fourth quarter, Johnson & Johnson expects continued procedure stabilization in the Medical Devices unit. Fourth-quarter sales are expected to be flat to down 10% in the Medical Devices unit. The potential impact of rising cases of infection on the segment remains to be seen.

The Zacks Consensus Estimate for the Medical Devices segment is $6.68 billion.

In the Consumer Healthcare segment, higher sales of OTC products, oral care products, and digestive health products are likely to have been offset by the negative impact of the COVID-19 pandemic on certain categories like skin health/beauty.

The Zacks Consensus Estimate for the Consumer Healthcare segment is $3.67 billion.

Importantly, investors will also focus on whether Johnson & Johnson provides its financial outlook for 2021.

Key Recent Development:

Last month, Johnson & Johnson announced that its ENSEMBLE phase III study on its single-dose COVID-19 vaccine candidate, JNJ-78436735, is now fully enrolled with approximately 45,000 participants. Johnson & Johnson had earlier said it will enroll 60,000 participants globally. However, it clarified that 45,000 participants will be sufficient to generate the data needed to determine the efficacy and safety of the candidate. Johnson & Johnson expects to report interim efficacy data from the ENSEMBLE study by end of January 2021. If the data are positive, Johnson & Johnson will file an application for EUA from the FDA in February. An update is expected on the investor call.

A Johnson & Johnson board member said the company is aiming to have enough doses of its Covid-19 vaccine available by “April or so” to inoculate 100 million Americans, assuming the clinical trials are successful.

Speaking on CNBC Thursday, Dr. Mark McClellan, a former commissioner of the Food and Drug Administration who sits on the board of Johnson & Johnson, said the company is working to maximize the production of the vaccine.

Fauci Warns About New Virus Strains:

Data from a Phase 3 trial of the Johnson & Johnson Covid-19 vaccine is expected in the coming days. The trial tests the vaccine as a single-dose, rather than the two-dose regimen required by the two Covid-19 vaccines currently authorized for emergency use by the FDA.

Last week, Johnson & Johnson’s CEO said the company aimed to have hundreds of millions of doses of the vaccine available in the first half of the year, and nearly a billion by the end of the year.

Earnings Whispers:

Earnings ESP: Johnson & Johnson’s Earnings ESP is -2.53% as the Zacks Consensus Estimate is pegged at $1.81 and the Most Accurate Estimate is lower at $1.76.

Zacks Rank: Johnson & Johnson has a Zacks Rank #3.

Johnson & Johnson Long (Buy)

ENTER AT: 165.51

T.P_1: 172.17

T.P_2: 180.66

T.P_3: 191.25

S.L: 154.79

Johnson & Johnson
Johnson & Johnson
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