JNJ Begins Drug Sector Q2 Earnings With a Beat & Guidance Raise
Adjusted earnings exclude intangible amortization expense and special items. Including these items, reported earnings were $2.29 per share, up 18.7% year over year.
Sales of this drug and medical devices giant came in at $23.74 billion, which also beat the Zacks Consensus Estimate of $22.80 billion. (Find the latest earnings estimates and surprises on Zacks Earnings Calendar.)
Sales rose 5.8% from the year-ago quarter, reflecting an operational increase of 4.6% and a positive currency impact of 1.2%. Organically, excluding the impact of acquisitions/divestitures and currency, sales rose 3.0% on an operational basis.
Second-quarter sales in the domestic market rose 7.8% to $13.54 billion. Excluding the impact of all acquisitions and divestitures on an adjusted operational basis, domestic sales rose 5.0% in the quarter.
International sales rose 3.2% on a reported basis to $10.2 billion, reflecting an operational increase of 0.6% and a positive currency impact of 2.6%. Excluding the impact of all acquisitions and divestitures on an adjusted operational basis, international sales rose 0.4% in the quarter.
J&J's Innovative Medicines Unit Outperforms, MedTech Misses
With the complete separation of the Consumer Health segment into a newly listed company called Kenvue KVUE in 2023, J&J has now become a two-sector company focused on the Pharmaceutical and MedTech fields. KVUE will report its second-quarter results in early August.
J&J's Innovative Medicines segment sales rose 4.9% year over year to $15.2 billion, reflecting a 3.8% operational increase and a positive currency impact of 1.1%. Excluding the impact of all acquisitions and divestitures and currency on an adjusted operational basis, worldwide sales rose 2.4%. Innovative Medicines sales beat the Zacks Consensus Estimate of $14.55 billion as well as our model estimate of $14.50 billion.
Higher sales of key products such as Darzalex, Tremfya and Erleada due to strong market growth and share gains drove the segment's growth. Xarelto and Simponi/Simponi Aria sales also rose in the quarter. New drugs like Carvykti, Tecvayli, Talvey, Rybrevant and Spravato contributed significantly to growth. The sales growth was partially dampened by lower sales of Imbruvica and generic/biosimilar competition to drugs like Stelara and Zytiga.
JNJ's Oncology Drugs' Performance
Sales of blockbuster multiple myeloma medicine Darzalex rose 23.0% year over year to $3.54 billion in the quarter. Sales beat the Zacks Consensus Estimate of $3.45 billion and our model estimate of $3.44 billion.
Imbruvica sales declined 4.5% to $735.0 million. Rising competitive pressure in the United States due to new oral competition has been hurting Imbruvica's sales for the past few quarters. Imbruvica sales were, however, better than the Zacks Consensus Estimate of $697.0 million and our estimate of $694.8 million.
Erleada generated sales of $908.0 million in the quarter, up 23.4% year over year. Erleada sales beat the Zacks Consensus Estimate of $853.0 million as well as our model estimate of $903.9 million.
New drug Carvykti recorded sales of $439.0 million compared with $369 million in the previous quarter.Another new drug, Tecvayli, recorded sales of $166.0 million in the quarter, up 23.1% year over year,
Sales of Talvey were $106 million, up 55.0% year over year. Rybrevant/Lazcluze sales were $179 million compared with $69 million in the year-ago quarter.
Zytiga sales declined 11.6% to $145.0 million in the quarter due to generic competition.
JNJ's Immunology Drugs' Performance
Sales of the blockbuster psoriasis drug, Stelara, declined 42.7% to $1.65 billion in the quarterdue to the impact of biosimilar competition and Part D redesign. While U.S. sales of Stelara declined 41.9%, international sales declined 44.2% in the quarter. Stelara sales missed the Zacks Consensus Estimate as well as our model estimates of $1.88 billion.
Several biosimilar versions of J&J's multi-billion-dollar immunology drug, Stelara, have been launched in the United States in 2025. According to patent settlements and license agreements, Amgen AMGN, Teva Pharmaceutical Industries TEVA, Samsung Bioepis/Sandoz and some other companies have already launched Stelara biosimilars this year.
Tremfya recorded sales of $1.19 billion in the quarter, up 31.0% year over year. Tremfya sales beat the Zacks Consensus Estimate of $1.08 billion as well as our model estimate of $1.09 billion.
Simponi/Simponi Aria sales rose 28.6% to $690.0 million. Sales of Remicade rose 15.9% in the quarter to $455.0 million.
JNJ's Neuroscience, PAH and Other Drugs' Performance
In neuroscience, Spravato recorded sales of $414.0 million, up 53.3% year over year. Caplyta, added from the Apil acquisition of Intra-Cellular Therapies, recorded sales of $211 million in the quarter. Invega Sustenna/Xeplion/Invega Trinza/Trevicta sales declined 5.9% to $992.0 million in the quarter.
Pulmonary arterial hypertension (PAH) drug Uptravi recorded sales of $476.0 million, up 11.7% year over year. Another PAH drug, Opsumit, recorded sales of $582.0 million, up 6.4% year over year.
Xarelto sales rose 5.6% in the quarter to $621.0 million. Prezista sales declined 9.4% to $396.0 million.
How Did JNJ's MedTech Segment Perform in Q2?
MedTech segment sales came in at $8.54 billion, up 7.3% from the year-ago period, including an operational increase of 6.1% and a positive currency impact of 1.2%. MedTech segment sales beat the Zacks Consensus Estimate of $8.25 billion as well as our model estimate of $8.31 billion.
Excluding the impact of all acquisitions and divestitures, and currency, on an adjusted operational basis, worldwide sales rose 4.1%.
In the MedTech segment, over the past couple of quarters, gains from recent acquisitions of Shockwave and Abiomed, as well as continued uptake of new products, have been offset by continued headwinds in Asia Pacific, specifically in China and increased competitive pressure in U.S. electrophysiology for PFA ablation catheter. Sales in China are being hurt by the impact of the volume-based procurement (VBP) program. VBP is a government-driven cost containment effort in China.
JNJ Ups 2025 Sales and EPS Guidance Range
The company raised its sales expectations for 2025 by around $2.0 billion to reflect a strong operational performance coupled with currency tailwinds.
The sales guidance was raised from a range of $91.0 billion-$91.8 billion to $93.2 billion-$93.4 billion.
The sales range indicates growth in the range of 5.1%-5.6% versus the prior expectation of 2.6%-3.6%. Operational sales growth is expected in the range of 4.5%-5.0% (previously 3.3%-4.3%).
Adjusted operational sales (excluding currency impact, acquisitions/divestitures) growth is expected in the range of 3.2%-3.7% (previously 2.0%-3.0%).
The revenue figures exclude revenues from COVID-19 vaccine sales.
The adjusted earnings per share guidance was raised from a range of $10.50-$10.70 to $10.80-$10.90. On an operational, constant-currency basis, adjusted earnings per share are expected to increase in the range of 8.2%-9.2% (previously 5.2% to 7.2%).
Our Take on JNJ's Q2 Results
J&J kicked off the earnings season for the drug and biotech sector with earnings and sales beats. Despite the loss of exclusivity ('LOE') of Stelara, its Innovative Medicines unit once again outperformed expectations, with sales of all key drugs Darzalex, Erleada and Tremfya beating estimates. The new drugs also contributed significantly to sales. Stelara LOE hurt revenue growth by 1170 basis points in the second quarter.
MedTech unit's sales also beat estimates. J&J raised its sales and EPS guidance for the year. J&J's shares rose more than 2% in pre-market trading on Wednesday in response to the earnings beat and guidance raise.
So far this year, J&J's stock has risen 9.1% compared with an increase of 1.9% for the industry.
Image Source: Zacks Investment Research
J&J's Innovative Medicine unit is showing a growth trend. In 2025, J&J expects growth in the Innovative Medicine segment in the face of Stelara biosimilar entrants to be driven by its key products such as Darzalex, Tremfya, Spravato and Erleada, as well as new drugs like Carvykti, Tecvayli and Talvey, and new indications for Tremfya and Rybrevant.
J&J considers 2025 to be a 'catalyst year,' positioning the company for growth in the second half of the decade. J&J expects operational sales growth in both the Innovative Medicine and MedTech segments to be higher in the second half of the year than in the first. While newly launched products should drive growth in the Innovative Medicines segment in the second half, the MedTech segment may benefit from new products and easier comps.
J&J is also making rapid progress with its pipeline and has been on an acquisition spree lately, which has strengthened its pipeline.
However, the softness in the MedTech unit, the Stelara patent cliff and the potential impact of Part D redesign will be significant headwinds in 2025. It remains to be seen how the company navigates them. The legal battle surrounding its talc lawsuits is a persistent headwind.
J&J's Zacks Rank
J&J currently has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Johnson & Johnson Price, Consensus and EPS Surprise
Johnson & Johnson price-consensus-eps-surprise-chart | Johnson & Johnson Quote
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Johnson & Johnson (JNJ) : Free Stock Analysis Report
Amgen Inc. (AMGN) : Free Stock Analysis Report
Teva Pharmaceutical Industries Ltd. (TEVA) : Free Stock Analysis Report
Kenvue Inc. (KVUE) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
3 hours ago
- Yahoo
T. Rowe Price (TROW) Expected to Beat Earnings Estimates: What to Know Ahead of Q2 Release
T. Rowe Price (TROW) is expected to deliver a year-over-year decline in earnings on lower revenues when it reports results for the quarter ended June 2025. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price. The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on August 1. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise. Zacks Consensus Estimate This financial services firm is expected to post quarterly earnings of $2.10 per share in its upcoming report, which represents a year-over-year change of -7.1%. Revenues are expected to be $1.71 billion, down 1.4% from the year-ago quarter. Estimate Revisions Trend The consensus EPS estimate for the quarter has been revised 9.62% higher over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts. Price, Consensus and EPS Surprise Earnings Whisper Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction). The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). How Have the Numbers Shaped Up for T. Rowe? For T. Rowe, the Most Accurate Estimate is higher than the Zacks Consensus Estimate, suggesting that analysts have recently become bullish on the company's earnings prospects. This has resulted in an Earnings ESP of +0.99%. On the other hand, the stock currently carries a Zacks Rank of #1. So, this combination indicates that T. Rowe will most likely beat the consensus EPS estimate. Does Earnings Surprise History Hold Any Clue? Analysts often consider to what extent a company has been able to match consensus estimates in the past while calculating their estimates for its future earnings. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that T. Rowe would post earnings of $2.09 per share when it actually produced earnings of $2.23, delivering a surprise of +6.70%. Over the last four quarters, the company has beaten consensus EPS estimates three times. Bottom Line An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. T. Rowe appears a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. An Industry Player's Expected Results Among the stocks in the Zacks Financial - Investment Management industry, Blue Owl Capital Inc. (OWL), is soon expected to post earnings of $0.21 per share for the quarter ended June 2025. This estimate indicates a year-over-year change of +10.5%. This quarter's revenue is expected to be $636.89 million, up 22.5% from the year-ago quarter. The consensus EPS estimate for Blue Owl Capital has been revised 0.3% higher over the last 30 days to the current level. However, a lower Most Accurate Estimate has resulted in an Earnings ESP of -0.82%. This Earnings ESP, combined with its Zacks Rank #3 (Hold), makes it difficult to conclusively predict that Blue Owl Capital will beat the consensus EPS estimate. The company could not beat consensus EPS estimates in any of the last four quarters. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report T. Rowe Price Group, Inc. (TROW) : Free Stock Analysis Report Blue Owl Capital Inc. (OWL) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
3 hours ago
- Yahoo
TT Gears Up to Report Q2 Earnings: Here's What You Should Know
Trane Technologies plc TT is set to report second-quarter 2025 earnings on July 30, before the bell. The Zacks Consensus Estimate for earnings is pegged at $12.92 per share, indicating 15.2% year-over-year growth. The Zacks Consensus Estimate for revenues is pegged at $21.57 billion, indicating an 8.7% increase from the second-quarter 2024 actuals. TT's earnings surprise history has been encouraging. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 6.4%. Trane Technologies plc Price and EPS Surprise Trane Technologies plc price-eps-surprise | Trane Technologies plc Quote Q2 Expectations for TT Robust demand for innovative products and services in the Americas Commercial HVAC segment are expected to have positively impacted the top line. We expect Americas revenues to jump 10.1% from the year-ago figure to $4.7 billion. Our prediction for revenues from the EMEA is pinned at $677.5 million, indicating 5% year-over-year growth. Bottom-line growth is likely to have been supported by improved operational efficiency. What Our Model Says About TT Our proven Zacks model predicts an earnings beat for Trane Technologies this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. Trane Technologies has an Earnings ESP of +0.54% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter. Stocks to Consider Here are a few stocks from the broader Business Services sector, which, according to our model, have the right combination of elements to beat on earnings this time. Api Group APG: The Zacks Consensus Estimate for second-quarter 2025 revenues is pegged at $1.90 billion, indicating a 10% rise year over year. For earnings, the consensus mark is pegged at 37 cents per share, suggesting a 12% increase from the year-ago quarter's reported figure. The company beat on earnings in three of the past four quarters and met once, delivering an average surprise of 4.1%. APG currently has an Earnings ESP of +2.05% and a Zacks Rank of 1. You can see the complete list of today's Zacks #1 Rank stocks here. Fidelity National Information Services FIS: The Zacks Consensus Estimate for second-quarter 2025 revenues is pegged at $2.6 billion, implying a 3.5% rise year over year. For earnings, the consensus mark is pegged at $1.36 per share. The company beat on earnings in each of the trailing four quarters, delivering an average surprise of 5.9%. FIS currently has an Earnings ESP of +0.67% and a Zacks Rank of 3. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Fidelity National Information Services, Inc. (FIS) : Free Stock Analysis Report Trane Technologies plc (TT) : Free Stock Analysis Report APi Group Corporation (APG) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 hours ago
- Yahoo
Should Investors Buy Microsoft Stock Ahead of Q4 Earnings Release?
Microsoft MSFT is slated to report fourth-quarter fiscal 2025 results on July Zacks Consensus Estimate for revenues is pegged at $73.71 billion, indicating growth of 13.88% from the figure reported in the year-ago consensus mark for earnings has remained steady at $3.35 per share over the past 30 days, suggesting 13.56% year-over-year growth. Image Source: Zacks Investment Research MSFT Earnings Surprise History In the last reported quarter, the company delivered an earnings surprise of 8.13%. The company's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 5.21%. Microsoft Corporation Price and EPS Surprise Microsoft Corporation price-eps-surprise | Microsoft Corporation Quote Earnings Whispers for MSFT Our proven model does not conclusively predict an earnings beat for Microsoft this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP has an Earnings ESP of -0.64% and a Zacks Rank #2 at present. You can see the complete list of today's Zacks #1 Rank stocks here. Factors Shaping MSFT's Upcoming Results Microsoft's upcoming fourth-quarter fiscal 2025 results are expected to demonstrate strong momentum across its core business segments, driven by continued AI infrastructure investments and robust cloud adoption. The company positioned itself well for solid quarterly performance through strategic platform expansions and key product launches during the period, thus making it an appealing pick for investors ahead of the upcoming Productivity and Business Processes, Microsoft projects revenues between $32.05 billion and $32.35 billion, with model estimates indicating 12.2% year-over-year growth to $32.1 is expected to have benefited from sustained Microsoft 365 Commercial cloud growth, with management guiding approximately 14% constant currency (cc) expansion. The segment capitalized on continued ARPU growth through E5 and Microsoft 365 Copilot adoption, while LinkedIn maintained steady performance despite hiring market headwinds. For LinkedIn, the company expects revenue growth in high single enhanced its competitive position through major Build 2025 conference announcements, including new agent capabilities and enterprise-grade AI tuning features rolled out during the Intelligent Cloud segment continues to remain the primary growth engine, with revenue projections between $28.75 billion and $29.05 billion. Our model estimate for this segment is pegged at $28.89 billion, indicating growth of 21.5% from the figure reported in the year-ago quarter. Azure remains the standout performer, with revenue growth projected between 34% and 35% in cc. Microsoft added more AI computing power ahead of schedule in the previous quarter, helping the company meet rising customer demand even with some supply limits continuing past June. The company's $80 billion spending plan for fiscal 2025 helped build more data centers worldwide, with most of the investment happening in the United Build 2025 developer conference showcased the company's comprehensive AI platform strategy, introducing multi-agent orchestration capabilities, enterprise-grade security features and expanded model partnerships. These initiatives reinforced Microsoft's leadership position in enterprise AI adoption and positioned the company well for sustained growth momentum into fiscal Enterprise Services, revenues are expected to grow in mid-to-high single digits. The company expects Server product revenues to decline in mid-single More Personal Computing, the company projects revenues between $12.35 billion and $12.85 billion. Our model estimate for this segment is pegged at $12.43 billion, indicating growth of 1% from the figure reported in the year-ago Personal Computing is expected to have shown resilience through successful product rollouts, including the deployment of Recall, Click to Do, and enhanced Windows Search features to all Copilot+ PCs during the to-be-reported quarter. The segment received a significant boost from the phenomenal success of A Minecraft Movie, which achieved record-breaking box office performance, exceeding $900 million globally and drove increased weekly active users for the gaming franchise by over 75% year over revenue performance appears contingent on improving PC demand trends. According to the preliminary results from the International Data Corporation Worldwide Quarterly Personal Computing Device Tracker, second-quarter 2025 worldwide PC shipments reached 68.4 million units, growing 6.5% year over year, though Microsoft expects Windows OEM revenues to decline in mid-to-high single digits. The competitive landscape shows mixed results, with Lenovo LNVGY and Hewlett Packard HPE achieving 15.2% and 3.2% shipment growth, respectively, while Dell Technologies DELL experienced a 3% Gaming, the company expects revenues to grow in mid-single digits. Microsoft expects Xbox content and services revenues to grow in high single digits. This moderate performance in consumer-facing segments contrasts with the stronger enterprise and cloud divisions. MSFT Price Performance & Stock Valuation Shares of MSFT have gained 21.2% in the year-to-date period compared with the broader Zacks Computer & Technology sector's increase of 10.8%. Shares of LNVGY and DELL have gained 2.3% and 11.4%, respectively while HPE has lost 3.9% in the same period. Year-to-date Performance Image Source: Zacks Investment Research Now, let's look at the value Microsoft offers investors at current levels. MSFT is trading at a premium with a forward 12-month P/S of 11.99X compared with the Zacks Computer - Software industry's 8.93X, reflecting a stretched valuation. MSFT's P/S F12M Ratio Depicts Stretched Valuation Image Source: Zacks Investment Research Investment Thesis Microsoft presents a compelling investment opportunity ahead of fourth-quarter fiscal 2025 earnings, with an estimated 13.88% revenue growth to $73.71 billion driven by robust AI infrastructure investments and cloud adoption. The company's strategic positioning in enterprise AI through comprehensive platform expansions and Azure's impressive 34-35% cc growth trajectory demonstrate sustainable competitive advantages. Despite premium valuation and intensifying competition, Microsoft's $80 billion investment in global data centers, successful AI integration across productivity suites and strong momentum in the Intelligent Cloud segment position the company for continued market leadership and long-term value creation for shareholders. Final Thoughts Microsoft's strong fundamentals, driven by AI leadership and cloud dominance, make it an attractive investment despite a premium valuation. With projected double-digit revenue growth, robust Azure expansion and strategic AI investments positioning the company for sustained market leadership, investors should consider buying the stock ahead of fiscal fourth-quarter earnings. The company's comprehensive AI platform strategy ensures long-term competitive advantages and value creation. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT) : Free Stock Analysis Report Dell Technologies Inc. (DELL) : Free Stock Analysis Report Lenovo Group Ltd. (LNVGY) : Free Stock Analysis Report Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
