Johnson & Johnson (JNJ) Uncertain over Vaccine Sales, Slash FY Target

Key points:
 J&J cut FY profit expectations due to uncertainty regarding vaccine sales 
 The company lowered adjusted profit to between $10.15 and $10.35 per share, down from between $10.40 and $10.60 
 J&J posted earnings of $2.67 per share, beating consensus of $2.56 

Johnson & Johnson (NYSE: JNJ) was largely expected to outperform the big pharma sector, with most analysts expecting an earnings beat for the company’s Q1 report. Following two years of Covid-19, J&J amongst other big names thrived as companies competed in a heated vaccine race. As such, earnings were somewhat masked by the overarching work towards a global vaccine; but now the pandemic is on its way out; where does it leave J&J?

After today’s first-quarter earnings release, the company announced it would be cutting its full-year profit expectations due to a clouded view of the pandemic’s direction, meaning a high degree of uncertainty regarding future vaccine sales. The company are no longer able to effectively judge the need for Covid-19 vaccinations due to dwindling demand and a large variety of accessible ulterior shots.

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Previously, J&J has expected as much as $3.5B in sales from its single-dose vaccine, faring relatively poorly against US competition. In Q1, the company’s vaccine brought in around $457M, last year’s sales also underperformed rival mRNA shots due to the wider problems of supply and manufacturing bottlenecks.

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On the basis of lover vaccine demand, J&J expects FY adjusted profit of between $10.15 and $10.35 per share, lower than the previously expected $10.40 to $10.60. Looking at sales, the company record $23.43B, missing Street expectations of $23.61. Excluding items, J&J earned $2.67 per share, beating consensus of $2.56.

The vaccine question throws some unanswered questions into the forthcoming big pharma frey. There has been little insight into high levels of inflation or the current situation in Russia-Ukraine; investors should look towards sales in other interior units such as consumer health and medical devices as a promising movement away from vaccine revenue.