A Citi analyst has reaffirmed a Buy rating for Johnson & Johnson (NYSE:JNJ), maintaining the $180.00 price target.
The analyst highlighted Johnson & Johnson's third-quarter 2024 revenue, which surpassed expectations with a 5.6% organic increase, reaching $22.5 billion against the anticipated $22.2 billion.
The company saw a notable performance in Innovative Medicine sales, which reached $14.58 billion, marking a 6.7% organic growth excluding Covid-19 impacts, and exceeding the consensus of $14.15 billion.
While Innovative Medicine sales exceeded forecasts, the MedTech division reported $7.89 billion in revenue, a 3.7% increase but slightly below the expected $8.03 billion. Geographically, Johnson & Johnson experienced a 7.6% operational growth in U.S. sales and a 4.6% increase in sales outside the U.S. (OUS), with the Western Hemisphere excluding the U.S. seeing a significant 20.3% rise and the Asia-Pacific region (APAC) growing by 1.5%.
Operating margins showed a contraction to 28.9% from the previous year's 33.4%, attributed mainly to elevated research and development (R&D) expenses, which accounted for 21.8% compared to 15.8% year over year. The company posted earnings per share (EPS) of $2.42, an 8.9% decrease from the prior year, yet still ahead of the consensus estimate of $2.20. This EPS figure included a significant impact from acquired in-process research and development (IPR&D), which posed a 1,900 basis points headwind.
In light of recent performance, management at Johnson & Johnson has updated its operational sales growth guidance, raising it to a range of 5.7-6.2% from the previously stated 5.5-6.0%. However, the company has also revised its EPS outlook, now expecting $9.88-$9.98, down from the initial forecast of $9.97-$10.07, which includes the dilutive effects of mergers and acquisitions (M&A). This adjustment positions the EPS guidance slightly below the consensus estimate of $9.99.
Analysts from Stifel and Wells Fargo maintained their ratings on Johnson & Johnson's shares, following the company's recent acquisition of V-Wave Ltd. Additionally, Johnson & Johnson announced positive results for its drug TREMFYA® in treating ulcerative colitis and Crohn's disease, based on recent Phase 3 studies.
InvestingPro Insights
Johnson & Johnson's recent performance, as highlighted in the article, aligns with several key insights from InvestingPro. The company's strong revenue growth of 5.13% over the last twelve months, as reported by InvestingPro, supports the analyst's observation of a 5.6% organic increase in Q3 2024 revenue. This growth trend is further reinforced by the company's robust gross profit margin of 69.43% and operating income margin of 27.9% for the same period.
InvestingPro Tips reveal that Johnson & Johnson is trading at a low P/E ratio relative to its near-term earnings growth, with a current P/E ratio of 10.36. This could be particularly interesting for investors considering the company's recent earnings beat and updated guidance. Additionally, the tip noting that J&J has raised its dividend for 53 consecutive years underscores the company's financial stability and commitment to shareholder returns, which is reflected in its current dividend yield of 3.07%.
For readers interested in a deeper dive into Johnson & Johnson's financial health and market position, InvestingPro offers 11 additional tips, providing a comprehensive analysis of the company's strengths and potential areas of concern.
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