It has been about a month since the last earnings report for Johnson & Johnson (JNJ). Shares have added about 8.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Johnson & Johnson due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Q4 Earnings & Sales Beat Estimates
J&J’s fourth-quarter 2024 earnings came in at $2.04 per share, which beat the Zacks Consensus Estimate of $2.00. Earnings declined 10.9% from the year-ago period.
Adjusted earnings exclude intangible amortization expense and special items, including which, reported earnings were $1.41 per share, down 17.1% year over year.
Both adjusted and reported earnings included a 22 cents acquired IPR&D charge related to the V-Wave acquisition.
Sales came in at $22.52 billion, which marginally beat the Zacks Consensus Estimate of $22.51 billion. Sales rose 5.3% from the year-ago quarter, reflecting an operational increase of 6.7% and a negative currency impact of 1.4%. Organically, excluding the impact of acquisitions/divestitures and currency, sales rose 5.7% on an operational basis.
The Stelara loss of exclusivity (“LOE”) hurt revenue growth by 290 basis points in the quarter.
Fourth-quarter sales in the domestic market rose 10% to $13.2 billion. Excluding the impact of all acquisitions and divestitures on an adjusted operational basis, domestic sales rose 8.6% in the quarter.
International sales declined 0.7% on a reported basis to $9.32 billion, reflecting an operational increase of 2.5% and a negative currency impact of 3.2%. Excluding the impact of all acquisitions and divestitures on an adjusted operational basis, international sales rose 2.0% in the quarter.
Segment Details
Innovative Medicines
Sales in the Innovative Medicines segment rose 4.4% year over year to $14.33 billion, reflecting a 6.1% operational increase, offset by a 1.7% negative currency impact. Excluding the impact of all acquisitions and divestitures and currency on an adjusted operational basis, worldwide sales rose 6.3%. Innovative Medicines sales beat the Zacks Consensus Estimate of $14.27 billion as well as our model estimate of $14.1 billion.
Higher sales of key products such as Darzalex, Tremfya, Uptravi, and Erleada drove the segment’s growth. New drugs like Carvykti, Tecvayli and Spravato also contributed to growth. Xarelto and Simponi/Simponi Aria sales also improved in the quarter. The sales growth was partially dampened by lower sales of Stelara, Imbruvica and generic/biosimilar competition to drugs like Zytiga and Remicade.
Stelara LOE negatively impacted growth by 490 basis points.
In the Innovative Medicines segment, sales in the United States rose 11.4%, while outside U.S. sales declined 1% on an operational basis.
Darzalex sales rose 20.9% year over year to $3.08 billion in the quarter, driven by continued share gains across all lines of therapy, particularly the front-line setting, as well as market growth. Sales beat the Zacks Consensus Estimate of $3.04 billion and our model estimate of $3.06 billion.
Stelara declined 14.7% to $2.35 billion in the quarter due to the impact of current and potential biosimilar competition. While U.S. sales of Stelara declined 4.9%, international sales declined 32.7% in the quarter. However, Stelara sales slightly beat the Zacks Consensus Estimate of $2.34 billion as well as our model estimate of $2.21 billion.
A biosimilar version of Stelara was launched in certain European markets for certain indications in July 2024.
Several biosimilar versions of Stelara are expected to be launched in the United States in 2025. Amgen launched the first Stelara biosimilar, Wezlana, in January 2025.
Imbruvica sales declined 7.2% to $731.0 million due to rising competitive pressure in the United States due to new oral competition. However, Imbruvica sales were better than the Zacks Consensus Estimate of $729.0 million and our estimate of $710.1.
Erleada generated sales of $784.0 million in the quarter, up 20.9% year over year, driven by share gains and market growth. Erleada sales missed the Zacks Consensus Estimate of $805.0 million as well as our model estimate of $793.8 million.
Tremfya recorded sales of $949.0 million in the quarter, up 4.2% year over year, driven by strong market growth. Share gains were partially offset by an unfavorable patient mix and inventory issues. Tremfya sales also missed the Zacks Consensus Estimate of $1.06 billion as well as our model estimate of $1.09 billion.
New drug Carvykti recorded sales of $334 million compared with $286 million in the previous quarter, driven by share gains and continued capacity expansion. Another new drug, Tecvayli, recorded sales of $146 million in the quarter, up 15.8% year over year, driven by demand growth despite continued adoption of recently approved longer-duration dosing intervals.
Spravato recorded sales of $297.0 million, up 44.6% year over year, driven by the ongoing launch and increased physician and patient demand.
PAH drug Uptravi recorded sales of $465.0 million, up 11.2% year over year, driven by market growth, patient mix and share gains. Another PAH drug, Opsumit, recorded sales of $545 million, up 1.7% year over year.
Xarelto sales rose 28.5% in the quarter to $676.0 million due to favorable patient mix. Invega Sustenna/Xeplion/Invega Trinza/Trevicta sales rose 5.1% to $1.06 billion in the quarter. Simponi/Simponi Aria sales rose 16.2% to $583.0 million, while Prezista sales declined 7.4% to $407.0 million.
Zytiga sales declined 32.4% to $135.0 million in the quarter due to generic competition. Sales of Remicade were down 16.5% in the quarter to $359.0 million.
Distribution rights for Remicade and Simponi in Europe were returned in the fourth quarter, which benefited their sales in the quarter.
J&J will begin disclosing separate sales of Talvey, Opsynvi and Rybrevant from the first quarter of 2025.
MedTech Segment
MedTech segment sales came in at $8.19 billion, up 6.7% from the year-ago period, as an operational increase of 7.6% was offset by a negative currency movement of 0.9%. MedTech segment sales missed the Zacks Consensus Estimate of $8.25 billion as well as our model estimate of $8.23 billion.
Excluding the impact of all acquisitions and divestitures, and currency, on an adjusted operational basis, worldwide sales rose 4.6%.
In the MedTech segment, sales rose 7.6% in the United States as well as outside of the United States on an operational basis.
Sales in the MedTech business were driven by new product uptake and commercial execution, which were partially offset by continued headwinds in Asia Pacific, specifically in China and increased competitive pressure in U.S. electrophysiology for PFA ablation catheter. Sales in China were hurt by the impact of the volume-based procurement (VBP) program. VBP is a government-driven cost containment effort in China.
Cardiovascular (previously Interventional Solutions) sales grew 23.6%, driven by the growth of electrophysiology products and higher sales of Abiomed. The acquisition of Shockwave contributed $228 million to Cardiovascular sales in the fourth quarter. Worldwide Surgery declined 0.9% due to competitive pressure in energy and endocutters, VBP issues in China and Acclarent divestiture, partially offset by the strength of new products and continued price increases. Worldwide orthopedics rose 2.1%, driven by growth in new products and commercial execution, partially offset by VBP issues in China, competitive pressure and revenue disruption from the previously announced Orthopedics transformation. Worldwide Vision rose 7.9% as a decent performance in Contact Lenses due to commercial execution was partially offset by competitive pressure in the U.S market in Surgical Vision.
2024 Results
Full-year 2024 sales rose 4.3% to $88.82 billion, marginally missing the Zacks Consensus Estimate of $88.84 billion. Sales were slightly ahead of the guidance range of $88.4 billion-$88.8 billion.
Adjusted earnings for 2024 were $9.98 per share, up 0.6% year over year. Earnings beat the Zacks Consensus Estimate of $9.95 per share. Earnings matched the higher end of the guidance range of $9.88-$9.98 per share.
2025 Guidance
In 2025, the company expects sales in the range of $89.2 billion-$90.0 billion. The sales range indicates growth in the range of 0.5%-1.5%. Operational sales growth is expected in the range of 2.5%-3.5%.
The adjusted operational sales (excluding currency impact, acquisitions/divestitures) growth is expected in the range of 2.0%-3.0%.
The revenue figures exclude revenues from COVID-19 vaccine sales.
In 2025, J&J expects growth in the Innovative Medicine segment despite the loss of exclusivity Stelara, approximately $2 billion negative impact of the Part D redesign and heavier impact from Fx. The growth is expected to be driven by its key products, such as Darzalex, Tremfya, Spravato and Erleada as well as new drugs like Carvykti, Tecvayli and Talvey and new indications, including Tremfya in IBD and Rybrevant in non-small cell lung cancer.
In the MedTech segment, recent acquisitions of Shockwave and Abiomed, as well as continued uptake of its new products, are likely to drive growth. However, China will continue to remain a headwind in 2025. The MedTech segment faces difficult year-over-year comparisons in the first quarter. Sales are expected to be higher in the second half than the first half as the business moves past tougher first-quarter comps and new products gain momentum throughout 2025.
J&J expects operational sales growth in both the Innovative Medicine and MedTech segments to be higher in the second half than the first.
Adjusted earnings per share are expected in the range of $10.50-$10.70. The earnings range implies growth in the range of 5.2% to 7.2%.
On an operational, constant-currency basis, adjusted earnings per share are expected to increase in the range of 7.7% to 9.7%.
J&J expects higher earnings per share growth in the second half of the year versus the first half.
The sales and earnings guidance excludes the impact of the planned acquisition of Intra-Cellular Therapies. The pending acquisition of ITCI is expected to have a dilutive impact on adjusted EPS of approximately 30 cents to 35 cents per share in 2025.
J&J expects a negative currency impact of around $1.7 billion or 2.0% on sales and around 25 cents on earnings.
Adjusted pretax operating margin is expected to improve by approximately 300 basis points to be driven by cost savings and reduced acquired IPR&D costs.
Other income is expected to be in the range of $900 million to $1.1 billion.
Net interest income is expected to be between $0 million and $100 million due to higher interest expenses as J&J plans to fund the ITCI deal mainly with debt.
The adjusted tax rate guidance was maintained in the range of 16.5%-17.0%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Johnson & Johnson has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Johnson & Johnson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpJohnson & Johnson (JNJ) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
