Johnson & Johnson
Of course, the company has been in the headlines lately due to issues surrounding its Covid-19 vaccine due to clotting issues. While the vaccine remains on pause, most evidence indicates that risks are minimal. In Q1, the vaccine contributed $100 million to its top-line.
Inside the Numbers
In Q1, Johnson & Johnson had adjusted EPS of $2.59 which topped analysts' expectations of $2.34 per share. Revenue also beat at $22.3 billion against expectations of $22 billion.
The company has multiple segments in healthcare and consumer products but pharmaceuticals are its largest group and accounted for $12.2 billion in revenue a 10% increase from last year.
Consumer products which include Neutrogena and Listerine accounted for $3.5 billion in revenue, a 2.3% decrease. Demand for these items has dampened due to the coronavirus. Medical devices accounted for $6.6 billion in revenue which was 8% higher from last year.
Last year, many people, doctors, and hospitals put off procedures and doctors' visits, so we are seeing increased healthcare spending this year. Looking forward, the company forecasts a full-year profit of $9.42 to $9.57 per share and revenue between $90.6 billion and $91.7 billion.
The company raised its earnings and revenue guidance for the year. J&J now expects a full-year profit of $9.42 to $9.57 per share, compared with its previous forecast of $9.40 to $9.60 per share. It expects revenue between $90.6 billion and $91.6 billion, compared with its prior forecast of $90.5 billion to $91.7 billion.
Management also discussed the issues around its vaccine. It said it's sharing all of its data with the U.S. Centers for Disease Control and Prevention following reports of 6 women developing a rare blood clotting disorder with 1 dying and another in critical care. The company said it wants to make people aware of the risk and put guidelines in place to "restore confidence in our vaccine". A decision on the vaccine is expected next week. If it goes well, then the company expects to distribute 100 million vaccines in the first half of the year.
Stock Price Outlook
Johnson & Johnson is a long-term outperformer as it's consistently been able to innovate by developing new treatments, and it has stable revenues in terms of medical devices and consumer products. It also offers above-average dividend payouts and has consistently been able to increase dividends.
Given the bullish outlook for healthcare spending, the stock should continue to be an outperformer and safe place for investors to park their money. While the vaccine issue is yet to be determined, most expect that it will gain approval given the small number of people affected. Even if it does not, weakness in the stock price is a buying opportunity given that it accounts for a small fraction of the company's overall sales.
