Johnson & Johnson Set to Report Q3 2024 Results: What to Expect

Johnson & Johnson stock (NYSE: JNJ) is scheduled to release its third-quarter earnings on Tuesday, October 15. Anticipations are for the company to report revenue of $22.2 billion and earnings of $2.20 per share, which aligns closely with consensus estimates of $22.1 billion and $2.19, respectively. Higher sales of key drugs like Darzalex and Tremfya are likely to benefit J&J, while the MedTech segment may face challenges from China’s volume-based procurement program (VBP). For further insights, check our dashboard – Johnson & Johnson’s FY 2024Q3 Earnings Preview.

Key Trends to Monitor in Q3

Johnson & Johnson is expected to benefit from its multiple myeloma treatment, Darzalex, which has driven significant growth in its pharmaceuticals segment. In 2023, Darzalex sales may reach approximately $11 billion, with about $3 billion generated in Q3 alone. New treatments like Carvykti, another myeloma therapy, and Spravato, an antidepressant, are also increasing in market share—a trend projected to persist. Despite the recent launch of a biosimilar version of the second best-selling drug, Stelara, in Europe, we do not foresee a substantial impact in Q3.

MedTech Developments

In the MedTech division, Johnson & Johnson is anticipating a general increase in global procedure volumes. The performance of Abiomed is expected to improve due to greater adoption of its Impella technology. Additionally, the acquisition of Shockwave Medical, completed in May, should enhance MedTech sales growth in Q3. However, the ongoing VBP in China may continue affecting surgery-related sales.

Q2 Performance Review

In the previous quarter, Johnson & Johnson reported revenue of $22.4 billion for Q2, a 4.3% increase year-over-year. The company experienced a 5.5% growth in its Innovative Medicine segment and a 4.3% rise in MedTech revenue. When excluding the Covid-19 vaccine, pharmaceuticals sales surged by 8.8% year-over-year, driven by continued market share gains for Darzalex, Erleada, Spravato, and Tremfya. Stelara’s revenue grew by 3.1% year-over-year, amounting to $2.9 billion in Q2.

Understanding Johnson & Johnson’s Stock Outlook

Currently, there appears to be minimal growth potential for JNJ stock. Our valuation estimates place Johnson & Johnson’s share price at $172, reflecting only a 7% upside from its current price of $161. This estimation is grounded in a price-to-earnings (P/E) multiple of 17 and projected earnings of $10.04 per share on an adjusted basis for the full year 2024. The P/E multiple aligns with the average over the past five years. J&J expects adjusted earnings per share for 2024 to range between $9.97 and $10.07. If results align with projections in Q3, JNJ stock may remain steady in the following week; however, any changes in earnings forecasts and the impact of the biosimilar on Stelara will be crucial for future stock movements.

Long-term Performance Analysis

Over the past few years, JNJ stock has not shown significant changes, fluctuating from around $155 in early January 2021 to approximately $160 today. In contrast, the S&P 500 has grown by about 50% during the same period. Despite a seemingly steady performance, JNJ has demonstrated annual returns that were considerably less volatile compared to the broader market.

Portfolio Performance Context

The Trefis High Quality (HQ) Portfolio, composed of 30 stocks, has displayed lower volatility and has outperformed the S&P 500 annually during the same timeframe. This portfolio has achieved better returns with reduced risks, providing stability compared to traditional indices.

Comparative Analysis with Peers

While JNJ stock shows limited growth potential, examining how Johnson & Johnson’s Peers perform on essential metrics is worthwhile. Valuable comparisons across various industries can be found at Peer Comparisons.

[1] Returns as of 10/10/2024
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.