Published on 17 Apr 2024 on Zacks via Yahoo Finance

JNJ Beats Q1 Earnings Estimates, Misses on Sales: ETFs in Focus

Johnson & Johnson JNJ set the ball rolling for the pharma and medical device manufacturing space’s first-quarter 2024 earnings on Apr 17, before the opening bell. The world's biggest healthcare products maker continued with its long streak of earnings beat but lagged revenue estimates.JNJ shares declined 2.1% on the day and ETFs having the largest allocation to this diversified drug maker are in focus. These include iShares U.S. Pharmaceuticals ETF IHE, iShares U.S. Healthcare ETF IYH, First Trust Nasdaq Pharmaceuticals ETF FTXH, Health Care Select Sector SPDR Fund XLV and VanEck Vectors Pharmaceutical ETF PPH.Earnings per share came in at $2.71, beating the Zacks Consensus Estimate of $2.64 and improving 12.4% from the year-ago quarter. Revenues grew 2% year over year to $21.38 billion and fell short of the Zacks Consensus Estimate of $21.4 billion (see: all the Healthcare ETFs here).Innovative Medicines sales advanced 8.3%, while sales from MedTech devices jumped 6.3%. Sales of JNJ’s top-selling blood cancer treatment, Darzalex, jumped about 19% to $2.69 billion. The cancer drug is expected to bring in sales of more than $11 billion this year, according to analysts.Meanwhile, sales of the blockbuster psoriasis drug Stelara were flat at $2.45 billion and are expected to remain so this year amid new contract negotiations that could include price concessions. Stelara will also face biosimilar competition in the United States beginning in 2025. The pharma giant reached an agreement with Alvotech in February to launch its close copy in Japan, Canada and Europe this year..For 2024, Johnson & Johnson narrowed its guidance from $88.2-$89.0 billion to $$87.8-$88.6 billion, indicating year-over-year growth of 5.5%-6.0%. The adjusted earnings per share guidance was reduced from $10.55-$10.75 to $10.57 to $10.72.The diversified drug maker will increase its quarterly dividend to $1.24 per share, up 4.2% from $1.19 per share. That marks the company’s 62nd year of consecutive dividend increases. The dividend will be paid out on Jun 4.iShares U.S. Pharmaceuticals ETF (IHE)iShares U.S. Pharmaceuticals ETF provides exposure to 34 companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index. Of these, Johnson and Johnson takes the second spot, accounting for 22.5% share (read: Time to Tap Healthcare ETFs on Nvidia's AI Ambition?).iShares U.S. Pharmaceuticals ETF has $672.6 million in AUM and charges 40 bps in fees and expenses. Volume is lower as it exchanges about 66,000 shares a day. The fund has a Zacks ETF Rank #2 (Buy) with a High risk outlook.iShares U.S. Healthcare ETF (IYH)iShares U.S. Healthcare ETF offers exposure to 113 U.S. healthcare equipment and services, pharmaceuticals, and biotechnology companies by tracking the Russell 1000 Health Care RIC 22.5/45 Capped Gross Index. Here again, Johnson and Johnson is the second firm, accounting for 7.8% of the total assets. In terms of industrial exposure, pharma takes the top spot at 31.6%, followed by healthcare equipment (20.3%) and biotech (16.8%).iShares U.S. Healthcare ETF has amassed $3.3 billion in its asset base while charging 40 bps in annual fees. It trades in a moderate volume of around 310,000 shares a day and has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook.First Trust Nasdaq Pharmaceuticals ETF (FTXH)First Trust Nasdaq Pharmaceuticals ETF offers exposure to U.S. companies within the pharmaceuticals industry and tracks the Nasdaq US Smart Pharmaceuticals Index. It holds 50 securities in its basket, with JNJ occupying the fifth spot at 7% of the assets. FTXH has a lower AUM of $19.6 million and an average daily volume of 6,000 shares.First Trust Nasdaq Pharmaceuticals ETF charges 60 bps in annual fees and has a Zacks ETF Rank #2.Health Care Select Sector SPDR Fund (XLV)Health Care Select Sector SPDR Fund is the most popular healthcare ETF and follows the Health Care Select Sector Index. It holds 64 securities in its basket, with JNJ taking the third spot at 6.9% of the assets. Pharma, healthcare equipment & supplies, and healthcare providers and services take the largest share at 31.4%, 21% and 21%, respectively.Health Care Select Sector SPDR Fund manages $38 billion in its asset base and trades in a heavy volume of around 8 million shares. The expense ratio comes in at 0.09%. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: 4 Sector ETFs & Stocks to Benefit From Hot Inflation).VanEck Vectors Pharmaceutical ETF (PPH)VanEck Vectors Pharmaceutical ETF follows the MVIS US Listed Pharmaceutical 25 Index, which measures the performance of companies involved in pharmaceuticals, including pharmaceutical research and development as well as production, marketing and sales of pharmaceuticals. It holds 26 stocks in its basket, with Johnson and Johnson occupying the third position at 6.6% of assets.VanEck Vectors Pharmaceutical ETF has amassed $507.6 million in its asset base and trades in a good volume of about 128,000 shares a day. The expense ratio is 0.36%. VanEck Vectors Pharmaceutical ETF has a Zacks ETF Rank #3 with a Medium risk outlook.

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