What To Expect From Johnson & Johnson’s Q4?

JNJ: Johnson & Johnson logo
Johnson & Johnson

Johnson & Johnson stock (NYSE: JNJ) is scheduled to report its Q4 2022 results on Tuesday, January 24. We expect J&J to report revenues and earnings slightly above the consensus estimates. The company will likely see a steady rise in revenue led by continued market share gains for its drugs – Darzalex, Stelara, Erleada, and Tremfya. The company completed the acquisition of heart pump maker – Abiomed – last month, and it will aid the top-line growth for its MedTech segment in the coming quarters. While we expect the company to navigate well over the latest quarter, our forecast indicates that JNJ stock has little room for growth, as discussed below. Our interactive dashboard analysis of Johnson & Johnson Earnings Preview has additional details.

(1) Revenue expected to beat the consensus estimate

  • Trefis estimates J&J’s Q4 2022 revenues to be around $24.2 billion, reflecting a 2% y-o-y decline. This compares with the $24.0 billion consensus estimate.
  • While the company’s pharmaceuticals business is expected to lead the growth, driven by market share gains for Darzalex, Erleada, and Tremfya, forex headwinds will likely weigh on its overall revenue growth. Remicade will probably see a continued sales decline due to biosimilar competition.
  • J&J posted a 2% y-o-y sales growth in Q3 2022, as a 3% rise in pharmaceuticals and a 2% growth for the MedTech segment was partly offset by a <1% fall in Consumer Healthcare sales.
  • Our Johnson & Johnson Revenues dashboard offers more details on the company’s segments.
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(2) EPS likely to be marginally above the consensus estimates

  • J&J’s Q4 2022 adjusted earnings per share (EPS) is expected to be $2.24 per Trefis analysis, marginally above the consensus estimate of $2.23. This compares with the $2.13 EPS the company reported in Q4 2021.
  • J&J’s adjusted net income of $6.8 billion in Q3 2022 reflected a 3% y-o-y decline. This can be attributed to a nearly 150 bps fall in net margin.
  • The operating margins are expected to face headwinds from inflationary pressure and increased marketing expenses in Q4.
  • Looking forward, for the full-year 2023, we expect the adjusted EPS to be higher at $10.38 compared to $9.80 in 2021 and an estimated 10.05 in 2022.

(3) JNJ stock has little room for growth

  • We estimate Johnson & Johnson’s Valuation to be $182 per share, which is just 5% above the current market price of $173.
  • At its current levels, JNJ is trading at 17x forward expected earnings, aligning with its last three-year average, implying that it is fairly valued.
  • That said, if the company reports upbeat Q4 results and provides a 2023 outlook better than the street estimates, the P/E multiple will likely be revised upward, resulting in higher levels for JNJ stock.

While JNJ stock has only a little room for growth, it is helpful to see how Johnson & Johnson’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.

Furthermore, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised at how counter-intuitive the stock valuation is for Johnson & Johnson vs. FedEx.

Despite higher inflation and the Fed raising interest rates, JNJ has seen a rise of 4% in the last twelve months. But can it drop from here? See how low Johnson & Johnson stock can go by comparing its decline in previous market crashes. Here is a performance summary of all stocks in previous market crashes.

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Jan 2023
MTD [1]
YTD [1]
Total [2]
 JNJ Return -2% -2% 51%
 S&P 500 Return 4% 4% 79%
 Trefis Multi-Strategy Portfolio 8% 8% 241%

[1] Month-to-date and year-to-date as of 1/16/2023
[2] Cumulative total returns since the end of 2016

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