Johnson & Johnson slashed its 2022 guidance on Tuesday and cut its Covid vaccines outlook entirely — but JNJ stock popped at the open.
During the first quarter, Johnson & Johnson's Covid vaccine generated $457 million in sales. But most of the sales took place internationally. A year ago, those geographies weren't yet using J&J's single-shot vaccine. And U.S. sales tumbled by one-quarter.
Now, Johnson & Johnson is shifting its focus. There's a glut of Covid vaccines globally and demand is uncertain. The company suspended its Covid vaccines outlook. Previously, J&J guided to $3 billion to $3.5 billion in sales of the vaccine. But the company only trimmed its overall sales view by $1.1 billion.
On today's stock market, JNJ stock surged 3.1% to close at 183.08.
JNJ Stock: Sales Miss Forecasts
Overall, the quarter was mixed for Johnson & Johnson. The company earned $2.67 per share, minus some items, on $23.43 billion in sales. Earnings climbed 3.1% and beat analysts' call for $2.58 a share. Sales rose 5% but lagged projections for $23.62 billion.
The best growth, on a strict as-reported basis, came from J&J's pharmaceutical division. Sales grew 6.3% to $12.87 billion. Meanwhile, sales within the medical devices business advanced 5.9% to $6.97 billion and the consumer health division fell 1.5% to $3.59 billion. J&J is spinning off the latter business.
Third Bridge senior analyst Mikaela Franceschina is bullish on Johnson & Johnson's prospects. The spinoff should allow J&J to "overinvest in areas with high growth" for its pharmaceutical and medical devices businesses, she said in a report to clients.
"With the company's plan to spin off their consumer health business, addition of new partnerships and robust pipeline, the company should continue to see success despite any potential setbacks with competitive pressures and supply chain constraints," she said.
Remicade, Zytiga Sales Fall
Still, Johnson & Johnson experienced "an upset" in its pharma division, Franceschina said. Revenue from Remicade, an immunology drug, tumbled nearly 15% as many patients switched to lower-cost biosimilars. Further, sales from cancer drug Zytiga and all of J&J's heart-disease drugs fell.
But few medtech areas saw declines. Revenue from orthopedics advanced 3.5% to $2.19 billion. Sales of its surgical and vision products rose a respective 2.6% and 9.8%.
"The company's medical device segment has improved from previous hurdles with Covid-19, so it will be interesting to see how much the segment continues to grow and how the company tackles the ongoing supply shortages," Franceschina said.
For the year, Johnson & Johnson cut its adjusted earnings outlook by 25 cents at the midpoint. Now, the company expects $10.15-$10.35 per share, below analysts' call for $10.55.
J&J also sees $94.8 billion to $95.8 billion in sales, down $1.1 billion at the midpoint from its prior view. Analysts forecast $99.63 billion in sales.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
