JNJ

Johnson & Johnson's earnings beat consensus quarterly estimates by $0.10 per share, compared to Wall Street pool average forecast of $2.72. A hygienic product giant reported its Q2 sales at $22.45 billion, so that the number came out barely above analyst expectations of $22.34 billion, yet marking a nearly $1 billion (+5%) surplus vs the median sales for the previous three quarters. Actually, a great one-time improvement after many months of stagnation, even though fixing a 12% fall YoY in terms of revenue. From my point of view, the J&J business became more effective, as it provided almost the same income on a lower gross money basis, which means the ability to generate higher marginality. The latest report did not provide an immediate upside momentum for the stock. J&J share price even lost a few tenths of a percent in the pre-market trading today. Yet, the first market's response did not defy the recent technical bounce when J&J drifted off the $145 support area.

The price is still trying to consolidate above $150, which means growing confidence in the company's recovery so that the investing crowd presumably keeps in mind at least a $160 to $165 range as the short-term target area. If only the stock would close today above $150, I would be ready to buy and hold it. I personally feel the fundamental environment is now healthier. The company's management does not say the mountains are trembling, but instead it sees financial 2024 earnings at $10.05 per share vs the analyst average forecast of $10.01, according to Refinitive. It now expects total 2024 sales of $89.2 billion to $89.6 billion, vs prior forecast of $88.7 billion to $89.1 billion. Only the segment of medical technology business by J&J rose 2.2% to $7.96 billion from $7.79 billion ⁠YoY, which was less than consensus bets of $8.17 billion. With a trend of re-directing some part of money flows from high-flying AI-related megacaps led by NVIDIA to midcaps, such a small but positive revision may be enough to attract more investors' attention. J&J also announced a cash dividend of $1.24 per share on the company's common stock, payable on September 10, the ex-dividend date is August 27.

If one exclude a contribution of the COVID-19 vaccine, which is out of time, J&J's operational sales even grew by 7%, which may be attributed to the advancement of its product pipeline, including TREMFYA (to treat adults with psoriasis), RYBREVANT (a first-line treatment for non-small cell lung cancer), and the VARIPULSE platform (showing at least 12-month freedom from atrial arrhythmia recurrence in approximately 80% of the patients). The system, integrating a multi electrode catheter, a multi-channel pulsed field ablation generator and a cardiac mapping system, has been approved in January in Japan and partially in Europe, still waiting an approval by the US Food and Drug Administration (FDA), remaining as currently investigational for North America patients. J&J has more space upside in this regard, meaning better prospects in innovative oncology and immunology.

Of course, robust sales of its major drugs like blood cancer therapy Darzalex and psoriasis drug Stelara are always here. Stelara sales added 3.1% to $2.89 billion YoY, while Darzalex sales jumped as much as 18.4% to $2.88 billion. Stelara sales of more than $10 billion are expected in 2024, yet some analysts expect the figure may fall to $7 billion in 2025, as several close copy drugs are going to be launched by J&J rivals. To smooth the effect, the company is finalizing deals to make favourable U.S. insurance coverage for Stelara soon. A cancer cell therapy, named Carvykti, got sales of $186 million, up 60% YoY, even being watched below the $200 million analyst consensus prediction, limited only by tight supply, according to J&J. If so, I don't see large weaknesses in the company's drug line-up.