Johnson and Johnson (JNJ) — a giant in pharmaceuticals and consumer goods — continued its stellar streak with its robust first quarter results, observes Todd Shaver, growth and income specialist and editor of Bull Market Report.
The company posted $23.5 billion in revenues, up 5% YoY, compared to $22.3 billion a year ago. Profits for the quarter stood at $7.1 billion, or $2.67 per share, against $6.9 billion, or $2.59.
Despite marginal YoY growth rates, a beat on earnings and a miss on revenues, followed by their lowering the full-year sales and earnings guidance by $1 billion and $0.25 per share, respectively, the shares remained buoyant. This can mainly be attributed to the substantial pipeline and portfolio events during the quarter, along with the value to be realized with the company’s upcoming spinoffs.
The company’s consumer health division, mainly composed of over-the-counter products such as Tylenol and Imodium, reported $3.6 billion in sales, down slightly by 1.5% on a YoY basis, primarily owing to adverse currency impacts during the quarter. J&J’s pharmaceuticals segment logged $12.9 billion in sales, up 6.3%, followed by medical device sales at $7.0 billion.
The company faced substantial headwinds across the board during the course of this quarter, starting with supply chain constraints, resulting in higher input costs, coupled with inflationary pressures leading to increase in labor, energy, and transportation expenses.
The company is faced with a global surplus of its COVID-19 vaccine, along with uncertain demand, further affecting top-line figures. And just this week, the CDC their COVID shot was restricted by the FDA on a rare clotting disorder.
During the quarter the company was faced with a slowdown in new prescriptions and cancellations of elective surgeries owing to the Omicron variant, which has since subsided. Sales have picked up since February, and the company expects suppressed demand over the past two years to keep demand buoyant throughout the coming year.
With steadily growing earning, and a yield of 2.5%, this stock provides investors with the best of both worlds: value and growth. Further sprucing up value for investors is the company’s generous share repurchases, which stood at $1.6 billion during the first quarter alone.
With $30 billion in cash, $33 billion in debt, and $23 billion in free cash flows, it has been one of our “Forever Stocks,” as it inches closer to our price target at $188 a share.
With that said, we are adding a sell price now for the first time, at $160. In the current market environment, investors around the globe are selling anything that’s not tied down. Yes, we love this company, but if this $465 billion market cap company starts to falter, we’re out at $160.
