21 April 2021

Johnson & Johnson Shares Spike on Earnings Beat

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What’s happening: Shares of Johnson & Johnson surged on Tuesday after the pharma major reported its first-quarter earnings ahead of market expectations.

What happened: The company’s quarterly results come at a time when the distribution of its covid-19 vaccine has been halted in the US following cases of rare blood clotting disorder.

Apart from the upbeat results, investors also cheered encouraging news related to its vaccine from several regions around the world.

How were the results: J&J reported sales and earnings growth for the first quarter, with both metrics exceeding market views.

  • Consolidated revenues grew 7.9% to $22.3 billion, exceeding the consensus estimate of $22 billion.
  • Adjusted earnings came in at $2.59 per share, up 12.6% year-over-year, and well ahead of market expectations of $2.34 per share.

Why it matters: J&J reported a whopping sales figure of $100 million from its covid-19 vaccine that gained emergency use approval in February. The prospects of the vaccine have, however, come into question since, with US federal health agencies recommending against its use on reports of rare blood clots.

The company’s pharmaceutical sales climbed 9.6% to $12.2 billion, while sales from its Medical Devices segment surged 10.9% to $6.6 billion in the first quarter, reflecting the market’s recovery from the impact of the pandemic.

Johnson & Johnson boosted its quarterly dividend by 5% to $1.06 per share. Management raised the adjusted profit outlook for the full year to a range of $9.42 to $9.57 per share, from the earlier forecast of $9.40 to $9.60 a share.

The company also said it expects sales from its Medical Devices business to grow substantially in the second quarter.

Johnson & Johnson has applied to conduct Phase-3 trials of its covid-19 vaccine in India, after the country announced plans to issue fast-track emergency approvals for foreign-made vaccines amid the sudden spike in covid-19 infections.

The company plans to resume the rollout of its vaccine in Europe after the EMA (European Medicines Agency) recommended adding a safety warning with the vaccine.

How shares responded: Shares of Johnson & Johnson climbed 2.3% to close at $166.48 on Tuesday, following the release of quarterly results. The stock has gained around 2.5% in the past three months.

What to watch: Investors will monitor J&J’s progress in resuming the distribution of its vaccine in Europe and the US and developments around the trails in India.

The Markets Today

     

UK stocks will be in focus today ahead of a basket of economic reports from the country.

Context: British stocks closed sharply lower on Tuesday, with the FTSE 100 notching the biggest single-day decline since February 26.

Details: Although London’s FTSE 100 has gained more than 6% year to date, it has underperformed its European counterparts due to a surge in bond yields and rising covid-19 cases.

On Tuesday, London stocks were dragged lower by oil firms and cigarette makers, with shares of Associated British Foods taking a tumble after the company reported weak earnings over the last six months. Tobacco shares came under pressure on fears of stricter rules being announced by the US. Concerns over renewed travel restrictions also hit market sentiment for related stocks.

The blue-chip FTSE 100 index shed 2% to settle at 6,859.87, while the domestically focussed mid-cap FTSE 250 fell 1.7% on Tuesday.

Meanwhile, the GBP/USD climbed to its strongest level in over six weeks. However, the forex pair settled lower at $1.3928 on Tuesday.

What to watch: Traders await data on inflation rate, retail price index and producer prices from the UK. The annual inflation rate in the UK is expected to climb to 0.8% in March, from 0.4% in February. Analysts expect annual retail price inflation to reach 1.6% in March. Factory gate prices of goods produced in the country is projected to accelerate to 1.7% in March, after rising to 0.9% in February.

Rising covid-19 cases remain one of the top concerns for markets, with global infections surging past 142.6 million.

Other Markets: US indices closed lower on Tuesday, with the Dow Jones index, S&P 500 and Nasdaq 100 down by 0.75%, 0.68% and 0.71%, respectively.

Support & Resistances
for Today

     

market snapshot

     

Futures at 0400 (GMT)

What else to watch today

     

Italy’s construction output, South Africa’s inflation rate, Canada’s inflation rate and Bank of Canada’s interest rate decision, Argentina’s leading economic index as well as the US MBA mortgage applications and EIA’s crude oil inventories.

 

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