Title: JNJ's Future in Sight After an Optimistic Q4 Performance
Johnson & Johnson (JNJ) recently reported impressive Q4 earnings, surpassing street estimates with revenue of $22.5 billion and earnings per share of $2.04. Despite this, JNJ's stock took a 2% dive post-announcement. Let's delve into why.
The pharmaceutical giant's revenue growth of 5.3% year-over-year was bolstered by a 4.4% increase in its Innovative Medicine segment and a 6.7% rise in its MedTech segment. Darzalex, a top-seller, saw a 21% increase in sales, while Erleada and Spravato also posted double-digit gains. However, Stelara, another key drug, witnessed a 15% revenue drop. Stelara's decline is due to the looming biosimilar competition, expected to impact its sales significantly in the future.
The Q4'24 gross margin improved by 180 bps, reaching 68.3%, while adjusted earnings dropped slightly to $2.04 per share. This decrease was partly due to a $0.22 per share charge related to acquired IPR&D charges from the V-Wave acquisition.
Looking ahead, JNJ projected a 2025 sales outlook of $91.5 billion and adjusted earnings of $10.85 per share at the mid-point of the guided range. This outlook surpasses the consensus estimates of $91.0 billion and $10.56 per share, respectively.
Despite JNJ's overall strength, its stock hasn't seen significant gains post-results. Over the last four-year period, JNJ's performance has been volatile, contrasting with the Trefis High-Quality Portfolio's consistent outperformance of the S&P 500.
Now, let's discuss why the High-Quality Portfolio has outperformed. Since its inception, the portfolio has clocked >91% returns, outpacing the S&P 500 significantly. By providing better returns with less risk, the portfolio offers a smoother ride compared to individual stocks, like JNJ.
According to enrichment data, JNJ's stock underperformance can be attributed to several factors. These include declining Covid-19 vaccine sales, biosimilar competition, increased debt, regulatory challenges, pricing pressures, tepid sales guidance, and acquisition-related expenses. While these factors may weigh on JNJ's performance, their impact on the stock's longer-term growth prospects is still uncertain.
JNJ's Stelara, a drug from Johnson & Johnson (JNJ), experienced a 15% revenue drop in Q4 due to the anticipated biosimilar competition. The revenue from JNJ, as reported in their Q4 earnings, came in at $22.5 billion, with JNJ Revenue contributing significantly to this figure.
