Johnson & Johnson (JNJ, Financial) shares rose 3% following its Q3 earnings report. The company achieved its largest EPS beat in three years, with revenue increasing 5.2% year-over-year to $22.47 billion, slightly exceeding expectations. However, JNJ's FY24 guidance was conservative, lowering its adjusted EPS outlook to $9.88-$9.98 from $9.97-$10.07, despite strong Q3 results. The revenue outlook was slightly raised to $88.40-$88.80 billion from $88.00-$88.40 billion.
- Innovative Medicine Segment: Sales grew 4.9% year-over-year (+6.3% operational) to $14.58 billion, with 7.5% growth in the US and 4.4% outside the US. This growth was driven by key brands and new product uptake, with 11 assets achieving double-digit growth, helped by price increases due to Argentina's hyperinflation.
- Multiple Myeloma Portfolio: DARZALEX saw a 22.9% growth, driven by share gains across therapy lines. CARVYKTI achieved 87% year-over-year and 53.2% sequential growth to $286 million, supported by share gains, capacity expansion, and manufacturing efficiencies.
- MedTech Segment: Sales increased 5.8% year-over-year (+6.4% operational) to $7.89 billion, with 7.8% growth in the US and 5% abroad. Growth was driven by commercial execution and new product launches, though offset by challenges in Asia Pacific, particularly China. Electrophysiology grew 10.7% due to global procedure growth and new product uptake. Abiomed revenues rose 16.3% with strong growth in all regions, supported by Impella 5.5 and Impella RP technology adoption.
- Cardiovascular Segment: JNJ strengthened this area within MedTech through acquisitions of Abiomed and Shockwave Medical. Cardiovascular intervention is a fast-growing market, and JNJ is now a leader in this category. Q3 saw double-digit growth, boosted by the Shockwave E8 refill IVL Catheter launch.
- Guidance Concerns: JNJ's cautious FY24 guidance reflects concerns about the Asia-Pacific region, particularly China. The company has adopted a conservative outlook, assuming no significant improvement in this area, leading to a lowered adjusted operational sales growth forecast for 2024 to around 5%, down from 6%.
Overall, JNJ's Q3 results were solid, with impressive EPS growth, but the cautious guidance, particularly due to challenges in China, tempered enthusiasm. Despite positive performances from Abiomed and Shockwave, these were insufficient to significantly boost the stock.
