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Johnson & Johnson beats Wall Street forecasts
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Key points:
- Strong sales growth driven by key pharmaceuticals such as Darzalex and Stelara.
- Increased 2024 forecast: total sales from $89.2 billion to $89.6 billion.
- Sales in China and sales of surgical devices were below expectations.
Johnson & Johnson reported second-quarter results that beat analysts’ expectations on both earnings and revenue. The strong sales growth was driven primarily by the success of the company’s key pharmaceuticals, such as cancer drug Darzalex and psoriasis treatment Stelara.
Stelara has been one of J&J’s main growth engines for years, with analysts projecting sales to top $10 billion in 2024. However, that figure could plummet to $7 billion in 2025, when six biosimilars (closely related copies of the drug) are expected to hit the U.S. market.
Johnson & Johnson shares rise amid optimistic forecasts
The company’s shares rose nearly 3% to $155.40 in morning trading after the company raised its 2024 guidance.
J&J Chief Financial Officer Joe Wolk said he is confident that agreements will be reached over the next three months that will provide favorable insurance coverage for Stelara in the U.S. market in 2025.
During the earnings call, Wolk noted that sales growth in the company’s pharmaceutical division in the second half of the year will be lower than in the first half due to the launch of Stelara biosimilars in the European market at the end of July.
However, J&J performed well in the second quarter:
- Stelara sales: rose 3.1% to $2.89 billion, beating analysts’ forecast of $2.77 billion.
- Darzalex sales, a blood cancer drug, increased 18.4% to $2.88 billion, beating expectations of $2.86 billion.
Total revenue reached $22.4 billion, beating the consensus estimate of $22.3 billion. Adjusted earnings per share were $2.82, beating expectations of $2.70. The company also raised its 2024 guidance, with expected total sales of $89.2 billion to $89.6 billion, up from $88.7 billion to $89.1 billion previously.
J&J adjusts forecast for the year
J&J shares rose, as did shares of other medical device makers such as Abbott, Stryker, Medtronic.
Johnson & Johnson adjusted its full-year EPS forecast, lowering it to $10-$10.10 from $10.60-$10.75. The change takes into account expenses of 68 cents on deals including the $13 billion purchase of heart medical equipment maker Shockwave.
This is just one of several J&J deals this year. In May, the company acquired two developers of experimental drugs to treat skin diseases for $2.1 billion.
Despite these deals, J&J’s other second-quarter results were mixed:
- Medical device sales rose 2.2% to $7.96 billion from $7.79 billion a year earlier, but fell short of analysts’ forecasts of $8.17 billion.
- Sales of surgical devices declined year-over-year due to competition, supply constraints and lower demand for bariatric procedures.
In addition, sales in the Chinese market were below expectations.
J&J also faces legal challenges. The company still faces tens of thousands of lawsuits alleging its talc products cause cancer. J&J Chief Financial Officer Joe Wolk said the company has received settlement approval in recent weeks from three major law firms representing plaintiffs.
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