This article is part of a series to monitor the effects of the COVID-19 pandemic on large businesses and will be updated. It was originally released on April 10.
Johnson & Johnson
is, in many ways, the benchmark company for the performance of publicly traded healthcare companies.
Not only is it generally the first large company to report profits each season, but the three divisions (medical devices, pharmaceuticals and consumers) of its highly diverse company each tell a different story about the state of the healthcare industry. health, both in the United States and abroad. Considering the expected impact of the COVID-19 pandemic, and J&J’s story for the first quarter of 2020 will likely set the stage for what to expect from other drug manufacturers, biotechnology companies, manufacturers of medical devices and brands of beauty products and over the counter.
J&J investors will likely pay close attention to what the company is saying about surgical volume, drug sales at a time when fewer new prescriptions are being written and doctor visits for non-COVID-19 reasons have shown considerably, R&D productivity (other drug manufacturers like Eli Lilly & Co.
and Vertex Pharmaceuticals Inc.
discontinued new clinical trials) and business strategies when sales representatives are at home and many medical meetings have been canceled or posted online. Company officials have already reported a slowdown in elective procedures in China, Europe, Japan and South Korea.
“To a large extent, I would say that there is more diligence regarding the people who enter the institutions. And we’re starting to see some slowdown in elective procedures, “Ciro Roemer, president of J&J’s medical devices division in North America, said on March 11 at a virtual investor conference, according to a FactSet transcript of the call.
Like many other drug manufacturers, J&J is working on several COVID-19 projects, harnessing some of the knowledge it used to develop its experimental vaccine against Ebola virus disease, which was used during the epidemic in the Democratic Republic of the Congo, and the vaccine constructs for the Zika virus and HIV. The company recently identified a vaccine candidate; she and BARDA plan to jointly invest $ 1 billion in the development and testing of the candidate. He is also examining his own portfolio of investigational and approved antivirals as potential treatments for the disease and is partnering with the Prisma Health hospital system in South Carolina to manufacture a ventilator expansion device.
What the numbers say:
Returned: Analysts polled by FactSet expect $ 19.7 billion in first quarter revenue for the first quarter of 2020, up from a previous consensus forecast of $ 19.8 billion. For the full year, analysts now model $ 79.1 billion, down from the previous consensus of $ 81.7 billion.
Earnings: Analysts expect $ 2.02 per share in quarter earnings, down from previous forecasts of $ 2.03, according to the FactSet consensus. For the full year, analysts forecast earnings per share of $ 7.90, which is lower than the initial consensus forecast of $ 8.42 for 2020.
Movement of stock: J&J’s shares have fallen 3.2% in the past three months, compared to the S&P 500, which has dropped 14.3%. Of the 19 analysts monitored by FactSet who cover J&J, seven assess the stock at purchase, four deem it held and two deem it overweight, with an average price target of $ 155.35 as of April 10.
What the company says:
March 30: J&J plans to launch phase 1 clinical trials for its COVID-19 vaccine candidate by September, advising investors that the vaccine may be available for emergency use early next year, and that it is increasing its manufacturing capabilities to prepare. That said, the company said it “is committed to providing the public with an affordable, not-for-profit vaccine for use during an emergency pandemic.”
March, 31st: “It normally takes about five years, but as we all know, the times are very different … We have a team of scientists who have literally been working around the clock since January,” J&J CEO Alex Gorsky told Fox News. .
What analysts say:
• “For JNJ, the 2021 sales / EPS reduction is slightly more dramatic, as we assume that some of the non-emergency orthopedic procedures (hips / knees) are never recovered.” – SVB Leerink analysts Danielle Antalffy and Rebecca Wang wrote on April 8
• Expect slower first quarter sales for Darzalex, a multiple myeloma drug that received FDA approval in June of last year, “which should be roughly stable sequentially … due headwinds linked to a pandemic. ” – Asthika Goonewardene by SunTrust Robinson Humphrey wrote on April 6
• “JNJ has a diversified supply chain and large stocks of its products and we do not anticipate any shortage of products within JNJ’s branded pharmaceutical portfolio. In addition, we see a relatively inelastic prescription demand for the JNJ commodity portfolio, particularly in areas such as oncology and immunology. “- J.P. Morgananalysts in a note of April 3