Johnson & Johnson (NYSE: JNJ) is scheduled to report Q3 2021 results on, October 19 before the bell on Tuesday. In the previous report for Q2 in July, the company reported sales of $23.31 billion, an increase of 27.1% compared with $18.33 billion in the same quarter last year. Net profit was $6.28 billion, up 73.1% against $3.63 billion during the year-ago quarter. Diluted earnings per share (EPS) increased from $1.36 to $2.35. Adjusted diluted EPS rose 48.5% to $2.48 this year. This growth was driven by sales of various drugs, such as Stelara, Darzalex, Tremfya, Erleada, Imbruvica, and Invega Sustenna/Xeplion/Invega Trinza/Trevicta (paliperidone palmitate).
In Q3, the earnings report is likely to be driven by the fast-growing healthcare business due to increased sales volume of medical devices, increased sales of its cancer drugs, Imbruvica and Darzalex, immunology drugs, Stelara and Tremfya, along with contributions from Covid-19 vaccines. With more than half of the US population fully vaccinated and at the international level vaccination rates are gradually increasing, this will bode well for J&J’s medical device business. However, there may be short-term margin pressures due to inflationary constraints and supply chain constraints. Also, since the Covid-19 vaccine is sold on a non-profit basis, this will have an impact on overall drug margins.
The good news, supporting the company’s upcoming sales and business development reports, is that the FDA and VRBPAC unanimously voted 19-0 to recommend an Emergency Use Authorization (EUA) for the approval of a booster dose of the Johnson & Johnson COVID-19 vaccine for adults 18 years of age and older at least two months after initial vaccination with a single-use vaccine. Voting is based on findings from the company’s two clinical trials, including the ENSEMBLE 2 Phase 3 study. Phase 3 clinical data and current world data, both suggest Johnson & Johnson COVID-19 vaccine disposables are strong and durable. The company anticipates a decision from the FDA on EUA amendments to booster doses of the Johnson & Johnson COVID-19 vaccine in the coming days and plans to submit relevant data to other regulators, the World Health Organization (WHO) and National Immunization Technical Advisory Groups (NITAGs) across the board to inform decision-making on local vaccine administration strategies, as needed.
EPS consensus estimate:
According to Zacks Investment Research, based on 7 analyst forecasts, the consensus EPS forecast for the quarter was $2.37. The reported EPS for the same quarter last year was $2.2. Revenue is forecast to be $23.62 billion, up 12.1% from last year’s quarter, with the stock ranking at #4.
Johnson & Johnson Long (Buy)
Enter at: 162.66