JNJ Stock: The little-talked-about vaccine that hit sales

Covid vaccines took a heavy toll on two separate medical companies on Tuesday as the shots bit Johnson and Johnson(JNJ) fourth quarter sales and Danaherperspective of (DHR). The news left JNJ shares flat and DHR shares tumbled.


For Johnson & Johnson, pharmaceutical sales accounted for roughly 56% of total revenue, but were down 7.4% on a sequential basis, as reported. Revenue from its almost non-existent Covid vaccine plunged more than 57% to $689 million. All of these sales come from outside the US

Lee Brown, head of global healthcare at research firm Third Bridge, blamed the Covid vaccine for “effectively underperforming the entire segment”. Excluding the Covid vaccine, pharmaceutical sales fell just 1%, Johnson & Johnson said in a news release.

In the stock market today, shares of JNJ closed unchanged at 168.31, while shares of DHR lost 2% to end the regular session at 271.58.

JNJ Stock: Standouts Among Pharmaceutical Sales

Overall, the fourth quarter was a mixed bag for healthcare giant Johnson & Johnson. Adjusted earnings beat estimates of $2.35 per share, rising 10.3%. But sales fell 4.4 percent to $23.71 billion. Analysts polled by FactSet had expected $23.9 billion in sales.

Citeline analyst Zhyar Said excuses weak sales in the fourth quarter.

“Johnson & Johnson still managed to end the year with a 1.3% increase in sales, closing at $94.9 billion, which could have been even stronger under a more favorable exchange rate (exchange rate) scenario,” said he in an email to Investor’s Business Daily. Citeline is a research firm.

Third Bridge’s Brown saw some notable performances from the pharmaceuticals segment with strong sales of immunology drugs Stelara and Tremfya and cancer drugs Darzalex and Erleada. The latter two posted 26.6% and 40.9% sales growth in the fourth quarter, respectively.

On the upside for JNJ shares, the company’s consumer health segment generated stronger growth of 1% on a reported basis. Medtech sales were down 1.2%.

For the year, J&J forecast adjusted earnings of $10.45-$10.65 per share and $96.9-$97.9 billion in sales. JNJ stock analysts called for earnings of $10.33 per share and $97.75 billion in sales.

DHR Stock guide rails

Meanwhile, DHR shares fell 2.7% to close at 269.40 on disappointing guidance due to weak expectations for its contribution to Covid vaccine sales.

At Danaher, the only surprise came in the form of guidance, analysts said. The medical giant is calling for mid-single digit sales growth this year. Its core business will grow at a high single-digit rate, the firm said in a news release.

Evercore ISI analyst Vijay Kumar says Danaher now expects a lower contribution from Covid vaccines this year than previously forecast.

RBC Capital Markets analyst Conor McNamara called the full-year outlook “better than expected.” For the current quarter, Danaher expects mid-single-digit sales growth in total sales and in its core business. He noted that the company has also changed the way it defines its core business. Starting in the first quarter, it will spin off Covid tests, vaccines and therapeutics from its core business.

“While we view fiscal 2023 guidance as positive given fears of a slowdown in biomanufacturing, we think the first-quarter guidance and new revenue definition are likely to pressure stocks this morning,” he said in a note to clients.

However, he maintained his outperform rating on DHR shares.

Overall, Danaher earned $2.87 per share, less some items, on $8.37 billion in sales in the fourth quarter. The company pre-announced fourth-quarter results earlier this month.

Follow Alison Gatlin on Twitter at @IBD_AGatlin.


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