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Johnson & Johnson Shares Spike Despite Q4 Miss

The news shaping the markets today

Japan’s Nikkei 225 tumbled to a twelve-month low this morning, after all three major US stock indices settled lower on Tuesday as investors awaited the Fed’s interest rate decision.


Argentina’s economic activity grew 9.3% year-over-year in November, following 6.7% growth a month ago. Despite the latest reading coming in above market expectations of 7.4%, the ARS/USD forex pair remained flat after the news.


The IMF’s World Economic Outlook showed a downward revision in the 2022 growth projections for the US economy by 1.2 percentage points to 4%, which sent the Nasdaq 100 down by more than 300 points on Tuesday.


Brazil’s FGV Consumer Confidence Index fell to 74.1 points in January, from 75.5 points in the previous month. Despite this being the weakest reading since April, the BRL/USD pair rose in forex trading this morning.


Mexico’s economic activity grew 1.7% year-on-year in November, versus a 0.6% decline a month ago. The latest reading also surpassed market expectations of 0.8% growth and supported the MXN/USD forex pair.

 

What’s happening: Shares of Johnson & Johnson gained on Tuesday, despite the company reporting weaker-than-expected sales for its fourth quarter.

What happened: The company reported downbeat sales of its covid-19 vaccine in 2021 amid manufacturing delays and safety concerns for its shot.

Despite the revenue miss, the New Brunswick, New Jersey-based company reported higher-than-expected profits for the fourth quarter and projected steep growth in its covid-19 vaccine sales for 2022.

How were the results: The world’s largest healthcare conglomerate reported growth in both sales and earnings for the fourth quarter.

  • Net sales grew 10.4% year-over-year to $24.8 billion but missed the Street expectations of $25.29 billion due to weakness in its pharmaceutical and medical devices units.
  • Adjusted earnings rose 14.5% year-over-year to $2.13 per share, surpassing the consensus estimate of $2.12 per share.

Why it matters: Johnson & Johnson’s vaccine for covid-19 has underperformed that of its peers due to safety concerns and low uptake in the US. Sales of the company’s vaccine came in at $2.39 billion for 2021, below its own forecast of $2.5 billion.

J&J guided to covid-19 vaccine sales of between $3 billion and $3.5 billion in 2022. Meanwhile, arch-rivals Pfizer and Moderna projected their covid-19 vaccine sales at $29 billion and $18.5 billion, respectively, for the year.

“I think we’ve known for quite some time that J&J’s vaccine didn’t have as good data as, say Pfizer. There aren’t really any expectations for vaccine contribution over the long term,” analyst Ashtyn Evans of Edwards Jones said in a note to clients.

The company’s sales from medical devices unit grew 4.1% to $6.85 billion in the fourth quarter, while the consumer health segment’s sales rose 1.1% to $3.65 billion, boosted by over-the-counter products. Pharmaceutical sales came in at $14.29 billion.

Johnson & Johnson is looking to separate its consumer health division to focus on its large pharmaceuticals and medical devices unit.

Management projected overall sales between $98.9 billion and $100.4 billion for 2022, above the consensus estimate of $97.79 billion. The company guided to earnings between $10.40 and $10.60 per share, ahead of Street expectations of $10.37 per share.

How shares responded: J&J’s shares gained 2.9% to close at $167.63 on Tuesday. The stock has added around 1% over the past month.

What to watch: Investors will keep an eye on the split of the consumer health segment and the impact of this on the company’s overall sales. Markets will also monitor the pread of Omicron and the sales of J&J’s covid-19 vaccine.

The markets today

The Canadian dollar will be in focus today ahead of the Bank of Canada’s interest rate decision

 

Context: The CAD/USD forex pair rose on Tuesday, after hitting its lowest intraday level in more than two weeks in the previous session.

Details: The CAD/USD forex pair came under pressure on Monday amid growing tension around Russia’s possible attack on Ukraine. With growing geopolitical uncertainty, investors added more safe-haven US dollars to their portfolio.

The CAD/USD fell to 1.2701 on Monday, recording its weakest intraday level in more than two weeks, with sharp volatility in global equity markets. The forex pair rebounded slightly on Tuesday and ended the trading day at 1.2615, gaining around 0.2%.

Rising prices of crude oil, one of Canada’s major exports, also provided support to the Canadian dollar. WTI crude oil prices jumped around 2.8% to close at $85.60 on Tuesday.

What to watch: Traders await Bank of Canada’s interest rate decision today. The central bank is widely expected to maintain its interest rate at 0.25%. However, some experts have projected a rate hike at the upcoming meeting, which would be the first since October 2018. Markets will also keep an eye on the US Fed’s interest rate decision today.

The release of wholesale sales data will remain in focus. Wholesale sales in Canada grew 3.5% month-over-month to C$75.6 billion in November.

Other Markets: US indices closed lower on Tuesday, with the Dow Jones, S&P 500 and Nasdaq 100 down by 0.19%, 1.22% and 2.48%, respectively.

Support & resistances for today

Technical Levels News Sentiment
S&P 500 – 4,352.06 and 4,396.86 Positive
Nikkei 225 – 26,938.50 and 27,012.00 Positive
WTI Crude Oil – 84.99 and 85.29 Positive
EUR/USD – 1.1305 and 1.1310 Positive
USD/CAD – 1.2605 and 1.2617 Positive

Market snapshot

What else to watch today

France’s consumer confidence, initial jobless claims and unemployed persons, Brazil’s mid-month inflation rate, foreign direct investment and current account, Mexico’s retail sales, US MBA mortgage applications, goods trade balance, wholesale inventories, new home sales, crude oil inventories, gasoline inventories, distillate inventories and Fed’s interest rate decision, Russia’s producer price inflation, as well as Argentina’s leading economic index and retail sales.


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