News and analysis

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.

Ren (REN) is adding 10.7% to $0.0505 this week, slightly retreating from its $0.0513 peak on Tuesday. Most importantly, the token has returned to the support at $0.0500. It is now attempting to hold above this level and possibly approach the resistance of the downtrend at $0.0595. If this level is surpassed, the token will target $0.0750. This optimistic scenario is supported by Bitcoin (BTC), which is targeting $70,000. A Bitcoin rally may help REN climb by another 16.0% to $0.0595. If BTC continues above its all-time high, REN is likely to continue rising, breaking through the downtrend resistance.

Cosmos (ATOM) is rising by 1.5% to $6.310 this week, though it was 5.0% higher at $6.605 on Tuesday. The token retreated after a cautious breakthrough of the downtrend resistance. This could be positive for the upside scenario if prices hold above $6.25. This may push prices further up towards $7.00, or by 18.5%.

Bitcoin (BTC) is also rising above the support at $60,000 with a perspective to climb to $70,000, which could support ATOM as well. Additionally, Cosmos network developers have announced that its decentralized VPN, which uses ATOM as a native token, is almost completed. This development is also positive for ATOM's prices.

Uncertainty surrounding the interest rate road laid out by the U.S. central bankers initially prevented further development of the bullish rally towards new record highs in the banking segment. Either way, this is what these things look like from our point of view when looking at Wall Street's first response to quarterly reports of leading financial institutions before the weekend. JPMorgan Chase & Co, which is the largest banking business in the United States and also the world's biggest bank by market capitalization (nearly $600 billion at the moment) posted very strong earnings on July 12. It clearly beat consensus expectations in both top and bottom lines. However, its shares suddenly dipped after falling over 2% at the opening.

JPM got Q2 profit of $4.40 per share, which was $0.26 (+6.3%) higher than the average analyst estimate of $4.14 by Reuters poll, on its best ever revenue of $50.2 billion, topping Wall Street expectations for $4.28 per share in earnings on sales of $50.2 billion (+21.5% YoY compared to $41.3 in the same period of 2023), which was also way cooler than $42.5 billion and $39.9 billion during the previous two quarters. The better income was contributed with a $7.9 billion net gain related to Visa shares holding and non-interest revenue, driven by higher investment banking and asset management fees (increase by 50%), and CIB (corporate and investment banking) market share improving to 9.5% year-to-date.

The banking giant's CEO Jamie Dimon praised the current bank's performance, even though he marked moderate cautiousness about time to come. JPM was vigilant regarding potential economic risks, he emphasized while continuing to invest into growth and maintaining a robust balance sheet. The sceptics' camp mostly cited somewhat higher provision reserves for credit losses ($3.1 billion) and flattish trends in loans and deposits, including lower net income from bonds due to direct impact of higher for longer Federal Reserve's rates.

Meanwhile, Wells Fargo & Company (WFC) cut its forecast for net interest income the same day, which sent WFC shares 7.3% deeper despite impressing quarterly results as well. Yet, strong quarterly results did their job later, so that both JPM and WFC stocks were quickly picked up from Friday's lows, so that JPM nearly recover after losses before the end of the same trading session to climb another 2.5% on July 15, which allowed it to reset an all-time price record at $211.59 vs $210.29 in early July. Wells Fargo regained about half of its losses by July 16.

Banks do not fail Wall Street' crowds at the very beginning of the reporting season. They may be not performing as well on the charts as they could, walking rather in the rear-guard of the rallying Wall Street's formations, yet giving a positive tone for investors who are betting on upbeat reports from a diverse range of many other companies in their portfolios.