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Johnson & Johnson’s Growth Rate: How Has It Fluctuated?

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Johnson & Johnson’s growth rate

As discussed in the previous part of this series, on a constant-currency basis, Johnson & Johnson (JNJ) reported a ~4.3% revenue rise between 3Q15 and 3Q16. The company’s 3Q16 revenue was $17.8 billion, surpassing analysts’ estimate of $17.7 billion.

The above graph shows that foreign exchange rates have had a constant negative impact on Johnson & Johnson’s (JNJ) growth rate in each quarter. This is mainly because nearly 48% of JNJ’s total revenue is from sales outside the United States. The company operates 134 manufacturing facilities and eight innovation and research centers worldwide.

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3Q16 performance

Due to the restructuring of its business segments and the strong performance of key products Xarelto, Zytiga, Remicade, Stelara, and Olysio, Johnson & Johnson’s revenue has risen over the past few years. The company’s 3Q16 revenue of $17.8 billion, which surpassed Wall Street analysts’ estimate of $17.74 billion, represented a 4.3% constant-currency growth over the $17.1 billion reported in 3Q15.

During 3Q16, the company reported operational growth across all segments. However, foreign exchange and the Venezuelan currency devaluation impacted the growth of the company. The negative effect of foreign exchange surpassed the consumer segment’s operational growth, resulting in the segment’s revenue falling.

JNJ’s segment-wise 3Q16 revenue and the performance of its blockbuster drugs will be discussed later in this series. Johnson & Johnson’s Stelara competes with Amgen’s (AMGN) and Pfizer’s (PFE) Enbrel and Abbott Laboratories’ (ABT) Humira, and its drug Zytiga competes with Dendreon’s (DNDN) Provenge. To divest risk, investors could consider the Fidelity MSCI Healthcare Index ETF (FHLC), which has a 10.1% exposure to Johnson & Johnson.

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