Johnson & Johnson Tops Q2 Estimates; Raises 2020 Guidance

Johnson & Johnson (JNJ) exceeded analysts’ profit and sales expectations in the second quarter and lifted its earnings guidance for the full year on the back of growth at its pharmaceutical business.

J&J’s total sales dropped 10.8% to $18.34 billion in the second quarter, compared with the $17.61 billion, estimated by analysts. Net earnings fell to $3.63 billion, or $1.36 per share, from $5.61 billion, or $2.08 per share, in the year-earlier period. J&J earned an adjusted $1.67 per share, which is above the average analyst estimate of $1.49 per share.

Furthermore, the company ramped up its full-year adjusted profit forecast to a range of $7.75 to $7.95 per share, from a previous estimate of $7.50 to $7.90 per share. Full-year sales guidance was also raised to a range of $79.9 billion-$81.4 billion from $77.5 billion-$80.5 billion previously.

“Our second quarter results reflect the impact of COVID-19 and the enduring strength of our pharmaceutical business, where we saw continued growth even in this environment,” said J&J CEO Alex Gorsky. “We remain focused on advancing the development of a vaccine to help address this pandemic and deliver on our commitment to provide the vaccine on a not-for-profit basis for emergency pandemic use, globally.”

J&J is this month expected to start human clinical trials for its experimental vaccine against the coronavirus and has secured supply agreements to produce more than 1 billion doses of the vaccine candidate globally through the course of 2021, should it prove to be safe and successful.

Shares have been on a gaining path since plunging to a multi-year low in March and are now trading 1.7% higher than at the start of year.

Mizuho Securities analyst Vamil Divan said: “While commenting that the impact of the pandemic is fluid and evolving, the company sees some encouraging trends overall, with many procedures approaching pre-COVID levels and physician office visits and category growth trends in consumer improving from where they were earlier in the pandemic.”

Overall, Wall Street analysts are cautiously optimistic on the stock. The Moderate Buy analyst consensus consists of 5 Buy ratings versus 3 Hold ratings. That’s with a $169.33 average analyst price target indicating upside potential of 14% in the coming 12 months. (See JNJ stock analysis on TipRanks).

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