Johnson & Johnson's fourth-quarter beat bodes well for medtech stocks, an analyst said Tuesday. But JNJ stock slipped just after the open, undercutting its 200-day line.
Overall, sales within J&J's medical technology business climbed 13.3% on a strict, as-reported basis, to $7.67 billion. That topped expectations by roughly 250 basis points, Evercore ISI analyst Vijay Kumar said in a report.
He noted strength in electrophysiology sales should benefit rivals Boston Scientific and Abbott Laboratories, while Stryker and Medtronic could enjoy upside in their knee replacement and surgery divisions, respectively.
"In general, the beat bodes well for medtech across the board," he said in a report to clients.
But that didn't extend to JNJ stock on Tuesday. Shares of Johnson & Johnson skidded 1.6% to close at 159.81. That sent shares tumbling below their 200-day moving average, according to MarketSmith.com. Savvy investors are encouraged to sell when a stock breaches its 200-day line.
JNJ Stock: Narrow Fourth-Quarter Beat
During the December quarter, J&J earned an adjusted $2.29 per share on $21.4 billion in total sales, up a respective 11.7% and 7.3%. Excluding the impact of Johnson & Johnson's plummeting Covid vaccine sales, the company said its revenue climbed 10.9% operationally.
Adjusted profit came in a penny above expectations, according to FactSet. JNJ stock analysts also called for a slightly lower $21.02 billion in sales.
"But higher operating costs drove operating income 7% below consensus," Leerink Partners analyst David Risinger said in a report. "Financial item upside softened the impact on (earnings per share), which was in line with consensus."
He kept his outperform rating on JNJ stock.
Stelara, Tremfya And Darzalex Stand Out
In the pharma division, "the immunology franchise was once again the standout performer," Third Bridge analyst Lee Brown said in an email to Investor's Business Daily. He noted Stelara, which treats conditions like Crohn's disease and ulcerative colitis, brought in $2.75 billion in sales, climbing 15.3%.
Stelara "continues to enjoy market share gains, but is bracing for looming biosimilar competition," Brown said. He also noted Tremfya, a plaque psoriasis medicine, is gaining share. Sales of Tremfya grew 21% to $910 million. Meanwhile, sales of cancer drug Darzalex surged 22.4% to $2.55 billion.
On the medtech side, the standouts were electrophysiology, knee replacements and spinal surgery. The electrophysiology franchise put up a "stellar performance," Brown said, with sales growing 24.7% to $1.24 billion.
Orthopedic sales also jumped 5.6% to $2.27 billion, with knee replacements driving 9.2% growth.
For the year, the health care giant guided to adjusted earnings of $10.55 to $10.75 per share and $87.8 billion to $88.6 billion in sales. JNJ stock analysts forecast an adjusted $10.67 per share in earnings and $87.88 billion in sales.
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