Johnson & Johnson’s 1Q16 Revenues: High Hopes for Growth
Johnson & Johnson's 1Q16 Results Are Coming Soon: What to Expect
Johnson & Johnson’s revenue estimates
Analysts expect a growth of 0.4% in Johnson & Johnson’s (JNJ) 1Q16 revenues at ~$17.5 billion, following an increase in sales of its blockbuster drugs including Remicade, Stelara, Olysio, and Zytiga among others which will be more than offset by the negative impact of foreign exchange. Further to this, analysts estimate YoY (year-over-year) growth of ~1% and 2.8% for 2Q16 and 3Q16, respectively.
On an annual basis, Johnson & Johnson’s revenues have increased over the past few years following the restructuring of its business segments and the strong performance of a few of its key products, including Xarelto, Zytiga, Remicade, Stelara, and Olysio among others. JNJ’s 2015 revenues decreased by ~5.7% to $70.1 billion, compared to $74.3 billion for 2014. However, estimates show an increase of ~2% for 2016 and ~4.4% for 2017. The graph below shows the actual revenues and analyst estimates for Johnson & Johnson since 1Q14.
1Q16 expectations by segment
Johnson & Johnson’s business is divided into the following three business segments:
Pharmaceuticals
Medical Devices and Diagnostics
Consumer Healthcare
The Pharmaceuticals segment contributes nearly 45% of JNJ’s total revenues. This segment’s performance is expected to increase during 1Q16, too, mainly due to the operational performance of all products. The performance of this segment will be partly offset by lower expected sales from Hepatitis C products under the infectious disease franchise.
JNJ’s Medical Devices segment contributes nearly 36% of the company’s total revenues. The segment is expected to report operational growth, which might be offset by its diabetes and orthopedics franchises. The divestitures of its Cordis business in October 2015 and of its ortho-clinical diagnostics franchise in mid-2014 are expected to impact the growth rate for this segment, however.
Healthcare contribution and drivers
JNJ’s Consumer Healthcare segment contributes nearly 19% of the company’s total revenues. This segment will be driven by operational growth in all franchises, including women’s health products, baby care products, and oral health products. However, the wound care franchise may partly offset the segment’s growth during 1Q16. At the same time, key drugs like Stelara compete with Abbott’s (ABT) Humira, and Xarelto competes with Bristol-Myers Squibb’s (BMY) and Pfizer’s (PFE) Eliquis.
In order to divest risk, you might consider ETFs like the Vanguard Dividend Appreciation ETF (VIG), which has 4.3% of its total assets in Johnson & Johnson, or the Fidelity MSCI Healthcare Index ETF (FHLC), which has 9.9% of its portfolio in Johnson & Johnson.
Now let’s look at estimates for the Pharmaceuticals segment.
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