Yahoo Finance Johnson & Johnson’s 4Q15 Estimates: Revenues Will Fall
Why Johnson & Johnson’s 4Q15 Revenue May Fall
Johnson & Johnson’s 4Q15 revenue estimates
Analysts expect a decline of ~2.0% in Johnson & Johnson’s (JNJ) 4Q15 revenues to ~$17.9 billion following an increase in sales of its blockbuster drugs including Remicade, Stelara, and Zytiga, which will be more than offset by the negative impact of foreign exchange. Plus, analysts estimate year-over-year growth of ~1.7% and 2.4% for 1Q16 and 2Q16, respectively.
On an annual basis, Johnson & Johnson’s revenues have increased over the past few years following the restructuring of its business segments and strong performance of some of its key products including Xarelto, Zytiga, Remicade, Stelara, and Olysio among others. The company’s 2014 revenues rose by ~4.2% to $74.3 billion compared to $71.3 billion for 2013. However, the estimates show a decline of ~5.6% for 2015 and growth of ~3.0% and ~4.3% for 2016 and 2017, respectively.
The above chart shows actual revenues and analysts’ estimates for Johnson & Johnson since 3Q13. We’ll discuss various factors supporting expectations for future revenues in upcoming parts of this series.
Segment-wise expectations for 4Q15
Johnson & Johnson’s business is divided into two businesses and three business segments:
pharmaceuticals
medical devices and diagnostics
consumer healthcare
The pharmaceutical segment contributes to nearly 45% of total revenues for JNJ. The segment performance is expected to decline during 4Q15 mainly due to the infectious disease franchise.
The medical devices segment contributes nearly 36% of total revenues for JNJ. The segment is expected to report operational growth that might be offset by its diabetes and orthopedics franchise.
The consumer healthcare segment contributes nearly 19% of total revenues for JNJ. This segment will be driven by operational growth in all franchises including women’s health products. However, the wound care franchise may partly offset growth during 4Q15.
We’ll discuss the expected performance of blockbuster drugs in the following articles. Companies including Unilever NV (UN) and Procter & Gamble (PG) compete with JNJ’s consumer health segment while Medtronics (MDT) and Stryker (SYK) compete with its medical devices segment. Investors can consider ETFs like the iShares US Pharmaceuticals ETF (IHE) or the Fidelity MSCI Healthcare Index ETF (FHLC) in order to divest the risk.
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