Johnson & Johnson
CEO : Mr. Joaquin Duato
Quarterly earnings growth(YoY,%)
| Period | Revenue | Operating Income | EPS | Release Date |
|---|---|---|---|---|
| 2022 Q4 | -4.4% YoY | 8.8% | -25.2% | 2023-01-24 |
Joe Wolk says,
Financial Overview
- Generated free cash flow of approximately $17 billion in 2022
- $24 billion cash and marketable securities and $40 billion of debt for a net debt position of $16 billion at the end of 2022
- Invested more than 15% of sales for a total of nearly $15 billion in research and development
- Authorized a $5 billion share repurchase program and returned over $14 billion to shareholders in 2022
2023 Guidance
- Expect operational sales growth for the full year 2023 in the range of 4.5% to 5.5% or $96.9 billion to $97.9 billion
- Guiding adjusted earnings per share in the range of $10.40 to $10.60 on a constant currency basis
- Expect adjusted pretax operating margin to be flat driven by continued inflationary pressures and cost of goods sold, offset by continued operating expense leverage
- Projecting an effective tax rate for 2023 in the range of 15.5% to 16.5%
- Pharmaceuticals: Delivering above-market growth in 2023, driven by key assets such as DARZALEX, ERLEADA, TREMFYA, INVEGA SUSTENNA and UPTRAVI
- MedTech: Expect continued competitive growth fueled by market recovery and continued commercial uptake of recently launched products
- Consumer Health: Anticipate continued growth in line with the markets that they compete in
Other Key Points
- Launch of TECVAYLI, the filing of Talquetamab in the U.S. and Europe, FDA clearance for TELIGEN digital supply solution, the closing of the Abiomed acquisition and the tremendous progress made on separating the Consumer Health business
- Estimating $1.8 billion to $2.1 billion in after-tax Kenvue standup costs with $1.2 billion having already been incurred through the end of 2022.
- Expecting to complete the Consumer Health separation in 2023 with estimated dissynergies between $500 million and $750 million of annual after-tax impact.
Joaquin Duato says,
Operational growth and achievements in 2022
- Delivered full year operational growth of over 6% despite macroeconomic challenges.
- Pharmaceutical team achieved its 11th consecutive year of above market adjusted operational sales growth, delivering nearly 7% growth.
- MedTech generated above 6% full year operational growth, anticipating its second consecutive year outperforming its competitive composite.
- Completed the acquisition of Abiomed, positioning JNJ as the global leader in heart recovery and immediately enhancing MedTech revenue growth.
Plans for 2023 and beyond
- Finalizing plans for JNJ to operate as a two-sector company, dedicated to competitive performance, both in Pharmaceutical and MedTech.
- Aiming to become simpler, faster, and more focused; driving towards $60 billion in revenue by 2025.
- Expecting to achieve market growth in 2023 for the 12th consecutive year, even in the face of the STELARA loss of exclusivity and macroeconomic challenges.
- Transforming year for JNJ, completing the successful creation of their new Consumer Health Company, Kenvue.
- Continuing their commitment to organic innovation and investing nearly $15 billion in R&D during 2022.
- Increasing the dividend for the 60th consecutive year, instituting a share repurchase, and deploying over $17 billion in M&A.
Q & A sessions,
Multiple Myeloma Portfolio
- CARTITUDE-4 and CARVYKTI are expected to be the primary driver of growth for the Pharmaceutical group moving forward.
- Portfolio enables changing the treatment paradigm from treating to progression to treating to cure.
- CARTITUDE-4 is an event-driven study and will be very important in moving CARVYKTI into earlier lines of therapy.
2025 Targets
- Continuing to work towards delivering growth every year in the Pharmaceutical group through 2025 despite the loss of exclusivity of STELARA.
- Advancing their differentiated pipeline and achieving $60 billion in revenue by 2025.
Disconnect with the Street forecast
- Main disconnect between JNJ’s forecast and the Street forecast is its multiple myeloma portfolio, which JNJ sees as helping treat into cure rather than cannibalizing each other.
- Other disconnects include SPRAVATO, ERLEADA, pulmonary arterial hypertension franchise, Xarelto loss of exclusivity, and expectations for STELARA sales in the U.S.
Data Readouts in 2023
- Key data readouts in 2023 include CARTITUDE-4, Mariposa study, PAPILLON study, Phase 3 studies in RA and hemolytic disease of the fetus and the newborn, and Phase 2 study of oral IL-23.
Guidance
- JNJ’s guidance ranges were given due to the macroeconomic and geopolitical uncertainty.
- Outlook for the P&L assumes a lot of carryover of inflationary impact from 2022.
Market Growth
- Anticipate normal cadence of steady procedure recovery for MedTech, with 4% to 6% growth.
- Above-market growth anticipated for Pharmaceuticals, with 2.5% to 4% growth depending on region.
No bad stock 