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Johnson & Johnson shares rise despite sales miss

The news shaping the markets today

The US is looking to announce a further military aid package for Ukraine. The Dow Jones index, meanwhile, closed higher by around 500 points on Tuesday.


The People’s Bank of China held its benchmark interest rates for corporate and household loans unchanged at its latest meeting. The CNY/USD forex pair traded lower after the news.


The American Petroleum Institute announced a decline in US crude stockpiles by 4.496 million barrels in the week ending April 15, following a 7.757 million barrels increase in the prior week. WTI crude oil prices traded slightly higher on the news


Australia’s Westpac-Melbourne Institute Leading Economic Index rose by 0.3% year-over-year in March, following a 0.4% improvement in the previous month, which sent the AUD/USD pair higher in forex trading this morning


Japan recorded a trade deficit of ¥412.39 billion in March, versus a year-ago surplus of ¥615.63 billion. This being the eighth straight month of trade shortfalls exerted pressure on the JPY/USD forex pair.

 

What’s happening: Shares of Johnson & Johnson rose on Tuesday, despite the company reporting downbeat revenues for its first quarter.

What happened: Despite the sales miss, Johnson & Johnson managed to surpass profit estimates for the quarter.

However, the pharma giant reduced its full-year profit projections and suspended its forecast for covid-19 vaccine sales.

How were the results: The New Brunswick, New Jersey-based company reported growth in both sales and profits for the first quarter.

  • Net sales rose 5% year-over-year and 7.9% on an operational basis to $23.43 billion, missed market expectations of $23.67 billion.
  • Adjusted earnings came in at $2.67 per share, up 3.1% year-over-year, beating the Street estimate of $2.61 per share.

Why it matters: Almost all covid-19 vaccine makers have been concerned about the future of vaccine sales with the pandemic waning.

J&J recorded covid-19 vaccine sales of $457 million during the quarter, with sales declining by 25% to $75 million in the US. The company had generated vaccine sales of $2.39 billion last year.

The company’s vaccine represents around 3% of overall doses administered in the US and around 2% in Europe. Most of the company’s vaccine supply has been sent to lower income nations due to weak demand in Europe and the US.

Johnson & Johnson had announced plans in late November to spin-off its consumer health division to focus on its pharmaceutical and medical devices division. The company’s sales from medical devices rose 8.6% to $6.97 billion, while sales at the consumer health segment grew by 1.6% to $3.58 billion, led by over-the-counter products.

Sales from J&J’s drug business rose to $12.9 billion in the quarter but missed Street expectations of $13.5 billion. However, this business remains the strongest growth driver for the company.

Management reduced their adjusted profit estimates for fiscal 2022 from between $10.40 and $10.60 per share to between $10.15 and $10.35 per share. The company also projected sales of $97.3 billion to $98.3 billion for the year, below the consensus estimate of $99.31 billion.

Moreover, J&J suspended its covid-19 vaccine sales forecast citing a global supply surplus and uncertainty in demand.

The group boosted its quarterly dividend by 6.6% to $1.13 per share.

How shares responded: Johnson & Johnson’s shares gained 3.1% to close at $183.08 on Tuesday, following the release of quarterly results. The stock has gained around 7% year to date.

What to watch: Investors will keep an eye on the company’s medical devices segment, which is expected to rebound after delays in non-urgent surgeries due to the pandemic.

 

The markets today

The Canadian dollar will be in focus today ahead of a couple of economic reports from the country

 

Context: The CAD/USD forex pair traded slightly lower on Tuesday, following the release of domestic economic reports and a decline in oil prices.

Details: The price of crude oil, one of Canada’s major exports, fell sharply on Tuesday on demand concerns as the IMF lowered global economic growth projections and warned of accelerating inflation. WTI crude oil prices lost 5.2% to reach $102.56 per barrel, settling at their lowest level in a week.

The IMF reduced its global growth forecast by 0.8 percentage points to 3.6% for 2022 and by 0.2 percentage points to 3.6% for 2023, citing the ongoing Russia-Ukraine war. It also projected inflation at 5.7% in advanced economies in 2022 and 8.7% in emerging and developing economies.

On the economic data front, Canada’s average home price declined 2.5% in March, while sales fell by 5.4%. Housing starts also contracted 2% to 246,243 units in March.

The CAD/USD forex pair fell around 0.1% to settle at $1.2622 on Tuesday.

What to watch: Traders await the release of data on inflation and new housing price index from Canada today. Canada’s annual inflation rate, which accelerated to 5.7% in February, is expected to increase further to 6.1% in March. New home prices are likely to rise 1.3% in March, following a 1.1% increase in February.

Investors will also keep an eye on the ongoing war in Ukraine and rising covid-19 cases in some parts of the world.

Other Markets: US indices closed higher on Tuesday, with the Dow Jones, S&P 500 and Nasdaq 100 up by 1.45%, 1.61% and 2.15%, respectively.

Support & resistances for today

Technical Levels News Sentiment
USD/CAD – 1.2601 and 1.2617 Negative
AUD/USD – 0.7386 and 0.7415 Positive
Gold – 1945.64 and 1949.39 Negative
Copper – 4.6867 and 4.7035 Positive
Nikkei 225 – 27050.84 and 27150.34 Positive

 

Market snapshot

What else to watch today

Eurozone’s trade balance, industrial production and European Union new passenger car registrations, Germany’s producer inflation, Italy’s balance of trade, South Africa’s consumer price index, US MBA mortgage applications, existing home sales, crude oil inventories, distillate stockpiles, heating oil stocks, gasoline production, and Fed Beige Book, India’s money supply M3, Russia’s producer prices, Brazil’s IBC-Br index of economic activity and government revenues, Canada’s ADP employment change, as well as Argentina’s leading economic index and balance of trade.


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