Johnson & Johnson (JNJ) before-the-bell Tuesday reported a strong first quarter, with sales up more than 5.5% and earnings eking out an annual increase. Shares of the Dow component and Club holding should not be losing 2.5% on these kinds of results. J & J’s first-quarter sales of $24.75 billion exceeded the Refinitv consensus estimate of $23.67 billion. On an adjusted operational basis, which excludes the impact of acquisitions and divestitures as well as currency fluctuations, sales rose 9% year over year. Adjusted diluted earnings came in at $2.68 per share, a solid beat versus the $2.50 per share estimate. On an operational basis, earnings per share (EPS) increased 3% year over year. Bottom line Given J & J’s strong Q1 results and rosy full-year outlook, we’re surprised to see the stock sell-off so harshly, trading below $160 per share at the lows of Tuesday’s session. We see two possible reasons. First, Covid vaccine-related sales, a less sustainable source of revenue, were so strong that they made the magnitude of the overall quarterly revenue beat seem less impressive to some investors. We’re leaning toward the second reason: Management’s 2025 Pharmaceutical sales target because J & J’s results would have exceeded estimates even without strong vaccine sales. On the post-earning call, management said they see Pharmaceutical sales in 2025 closer to $57 billion than the $60 billion forecast two years ago. They blamed current currency dynamics. That’s still well above analyst estimates of roughly $54 billion. However, with Wall Street already unconvinced about the $60 billion target, this latest update provided analysts with little reason not to be more confident in their own, lower, estimate. In fact, analysts may now be wondering if the roughly $54 billion estimate they were modeling needs to come down not up. The $60 billion figure for Pharmaceutical sales in 2025 was provided at the end of 2021. After that target was publicized, analysts were still only…
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