Will Johnson & Johnson Stock Rise Post Q1?

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JNJ
Johnson & Johnson

Johnson & Johnson stock (NYSE: JNJ) is scheduled to report its Q1 2023 results on Tuesday, April 18. We expect J&J to report revenues and earnings slightly above the consensus estimate, and JNJ stock appears to have more room for growth. The company will likely see a slight rise in revenue led by continued market share gains for some of its drugs, including Darzalex, which will help offset the decline in Remicade sales. The company completed the acquisition of heart pump maker – Abiomed – last year, and it is expected to aid the top-line growth of its MedTech segment. J&J recently offered $8.9 billion to settle all of its present and future talc litigation, and this move is being seen as a positive for the stock. Not only do we expect the company to navigate well over the latest quarter, our forecast indicates that JNJ stock has more room for growth, as discussed below. Our interactive dashboard analysis of Johnson & Johnson Earnings Preview has additional details.

 

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(1) Revenue expected to beat the consensus estimate

  • Trefis estimates J&J’s Q1 2023 revenues to be around $23.9 billion, reflecting a 2% y-o-y rise. This compares with the $23.7 billion consensus estimate.
  • While the pharmaceuticals business should benefit from market share gains for Darzalex, Erleada, and Tremfya, forex headwinds will likely weigh on its overall sales growth. Remicade will see a continued sales decline due to biosimilar competition.
  • J&J posted a 4% y-o-y sales growth in Q4 2022, as a 1% rise in consumer health sales was offset by a 1% decline for the MedTech segment and a 7% decline in pharmaceutical sales.
  • Our Johnson & Johnson Revenues dashboard offers more details on the company’s segments.

(2) EPS likely to be slightly above the consensus estimates

  • J&J’s Q1 2023 adjusted earnings per share (EPS) is expected to be $2.53 per Trefis analysis, slightly above the consensus estimate of $2.51. This compares with the $2.67 EPS the company reported in Q1 2022.
  • J&J’s adjusted net income of $6.2 billion in Q4 2022 reflected a 9.5% y-o-y rise. This can be attributed to the over 300 bps rise in net margin.
  • Looking forward, for the full-year 2023, we expect the adjusted EPS to be higher at $10.51 compared to $10.15 in 2022.

(3) JNJ stock has more room for growth

  • We estimate Johnson & Johnson’s Valuation to be $190 per share, about 16% above the current market price of $164.
  • At its current levels, JNJ is trading at 16x forward expected earnings, compared to its last three-year average of 17x, implying that it has room for growth.
  • That said, if the company reports upbeat Q1 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 more 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.

Given higher inflation and the Fed raising interest rates, JNJ has seen a 7% fall this year. Can it drop more? 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 Apr 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 JNJ Return 6% -7% 43%
 S&P 500 Return 0% 7% 84%
 Trefis Multi-Strategy Portfolio 0% 7% 237%

[1] Month-to-date and year-to-date as of 4/11/2023
[2] Cumulative total returns since the end of 2016

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