Johnson & Johnson Earnings Gives Market a Shot in the Arm

Johnson & Johnson Earnings Gives Market a Shot in the Arm

Pharmaceutical leader Johnson & Johnson reported earnings that exceeded analyst estimates, but what does this mean for the stock market?

Johnson & Johnson (NYSE: JNJ) released its Q3 earnings report on Tuesday. Despite slightly underperforming in terms of expected sales, reporting a number of $23.3 billion against an estimated $23.6 billion, the company produced earnings per share (EPS) of $2.60. This far exceeded the analysts’ expectations of just $2.35 EPS. 

Why is Johnson & Johnson up?

Johnson & Johnson’s share price has shot up since these impressive earnings announcements, with the price up again today having closed yesterday up 2.25% at $163.82. The positive finance sheet resulted in the company increasing its expected EPS for the year to between $9.77 and $9.82, up from a range of $9.60 to $9.70. This has prompted bullish sentiments in the market, leading to a price rise.

Johnson & Johnson most certainly benefited from its quick roll-out of a COVID-19 vaccine. It experienced rampant popularity due to its “one-shot” jab and relatively high vaccine efficacy. The company also posted pharmaceutical sales of $13 billion, up 13.8% from the year-ago quarter. This growth has been attributed to drugs in areas such as cancer treatment, and psoriasis. This news should be welcome to investors as the company’s future success isn’t deeply rooted in its COVID-19 vaccine offerings. This is particularly timely considering the news that its vaccine offering could be undermined if the FDA concludes that the one-shot vaccine really should have been two shots all along.

Medical device sales are also rising following a sharp downturn during the pandemic. This, coupled with an uptick in consumer health sales, should secure investors’ long-term interest in the company.

So, should I invest in Johnson & Johnson stock?

Already a leading brand name in healthcare and pharmaceuticals before the pandemic, the COVID-19 crisis has given Johnson & Johnson an opportunity to cement itself as a brand synonymous with people’s health and well-being. A strong financial outlook, combined with the expert navigation of a global crisis, has made the company appear to be a strong addition to any portfolio. 

However, investors should take note of any impending lawsuits surrounding the company that could damage its future price. Allegations surrounding its talcum powder having carcinogenic properties, along with recently settled cases related to opioid drug production, could spell trouble for the stock price if similar accusations continue to be unearthed.

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