Companies
Johnson & Johnson shares fall despite beating estimates and raising outlook
Johnson & Johnson shares tumbled after the drugmaker beat quarterly forecasts and raised its full-year outlook. Profit per share still fell from a year earlier, and some products lost ground.
Quick Read
- Johnson & Johnson shares tumbled 5.7% even though quarterly sales and adjusted profit beat analyst forecasts.
- The company raised its full-year sales and adjusted profit guidance, citing strength in cancer drugs.
- Adjusted profit per share still fell from a year earlier, Stelara sales declined and device sales outside the U.S. were weak.
- The health care sector fund slid 1.4%.
What did Johnson & Johnson report?
Johnson & Johnson (NYSE: JNJ) shares tumbled 5.7% on Tuesday to $248.61. They had closed the prior session at $263.73.
Why it matters: The drop came even though third-quarter sales and adjusted earnings per share topped the consensus, the average analyst forecast. Earnings per share is profit divided by the number of shares. That average is the bar a company aims to beat.
The company also raised its full-year guidance, its own forecast for sales and adjusted profit. Cancer drugs such as Darzalex, Carvykti and Erleada led growth in its drug business. The analyst average for full-year profit sits inside the new guidance range.
Why did the shares fall after a beat?
Reports did not name a specific cause for the drop. The results did carry weak spots. Adjusted earnings per share beat forecasts but fell from a year earlier.
Falling sales of Stelara, an older immunology drug, held back growth in the drug business. Sales of Simponi, Remicade and Imbruvica also declined.
In medical devices, management acknowledged weakness in cardiovascular and surgery businesses outside the U.S. Reported profit was far lower than adjusted profit. Several charges weighed on it. They were tied to a proposed talc lawsuit settlement, the Firefly Bio purchase and a Sail Biomedicines collaboration. The earnings effect of the Firefly Bio and Sail Biomedicines deals had been disclosed in July.
The broader health care sector fund slid 1.4%.
What comes next?
What’s next: Chief Executive Joaquin Duato said the company remains on track for record annual revenue. He also described an aim to become the world's leading cancer drug company by 2030.
The company said it is taking steps to improve its device business and remains confident in its long-term prospects. Whether those steps show up in results is an open question.
For the wider market, the September consumer price report arrives Wednesday, Oct. 14, at 8:30 a.m. The Fed announces its next rate decision on Oct. 28.
For readers
What it could mean for you: People who own Johnson & Johnson shares directly felt the full drop, with no other holdings to offset it. For them, later moves could hinge on whether cancer drug growth keeps outpacing falling Stelara sales. The company's efforts to fix device weakness outside the U.S. may also matter. The raised guidance could act as a yardstick: results that fall short of it might weigh on the stock. Results that meet it may ease some concerns.
Questions and answers
Why did Johnson & Johnson stock fall after beating earnings estimates?
Reports did not name a specific cause. The results showed adjusted profit per share down from a year earlier, falling Stelara sales and weakness in device sales outside the U.S.
Did Johnson & Johnson raise its guidance?
Yes. The company raised its full-year forecasts for both sales and adjusted earnings per share. The analyst average for full-year profit sits inside the new range.
What drove Johnson & Johnson's drug sales growth?
Cancer treatments such as Darzalex, Carvykti, Tecvayli and Erleada led growth. Tremfya, Spravato and Caplyta also contributed. Declining Stelara sales held growth back.
The numbers
| Johnson & Johnson (JNJ) price | $248.61 |
|---|---|
| Johnson & Johnson (JNJ) change | −5.73% |
| S&P 500 change | −0.02% |
| 10-year Treasury yield | 5.21% |
Tuesday’s close
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