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JNJ Q2 Earnings explored

There are often deeper facts underlying earnings reports, and $JNJ Johnson & Johnson’s Q2 earnings report is no different.

What the JNJ Q2 Earnings Tell On the Surface
image of JNJ logoJohnson & Johnson (JNJ) released its Q2 earnings results on Tuesday, July 18, 2017 with profits that were beyond expectations and sales that were below anticipation. Specifically, JNJ reported global sales of $18.84 billion while the market expectation was $18.97 billion. However, the sales figure did represent a 1.9% rise from the corresponding quarter of the previous year. Without currency fluctuations, that would translate to a 2.9% rise.

JNJ reported $1.83 earnings per share which exceeded the market estimates by $0.03 per share. It has managed to top EPS estimates of the Street in every single quarter for over three years. It also improved its full-year EPS forecast to the $7.15-to-$7.22 range from the previous $7-to-$7.15, with the company being usually conservative with regard to its full-year profit guidance. But experts dig deep beneath the headlines and reveal there’s a lot more to the company’s second quarter.

Lower US Pharmaceutical Sales
Leaving out currency fluctuations, Johnson & Johnson’s pharmaceutical segment experienced 1% growth globally, and this was accounted for by increased sales overseas. Within the United States, pharmaceutical sales actually fell 2.6%. Global pharmaceutical revenue made up almost 46% of the company’s total sales in Q2. Remember, the pharmaceutical segment is the company’s primary source of growth and margins. Investors would therefore be wondering why its pharmaceutical sales have struggled in the United States.

This domestic struggle in pharmaceutical sales can be accounted for by the competition faced by mature drugs from biosimilar drugs and generics. As a result of this decline in domestic sales, Johnson & Johnson has been busy acquiring organizations. It recently completed the $30 billion cash acquisition of Actelion, the Swiss-based specialty drug manufacturer. Here the company is banking on the growth in sales of the pulmonary arterial hypertension drugs developed by Actelion for counterbalancing the weak sales from Johnson & Johnson’s mature drugs.

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