Johnson & Johnson’s 1Q17 Earnings: Changes in Its Growth Rate



Johnson & Johnson’s growth rate

As discussed earlier, Johnson & Johnson (JNJ) reported a rise of ~2.0% in its revenue in constant currencies to $17.8 billion in 1Q17, compared to $17.5 billion in 1Q16. Its 1Q17 revenue missed analysts’ consensus estimate of $18.0 billion.

Foreign exchange rates have had a constant negative impact on Johnson & Johnson’s growth rate in each quarter, mainly because nearly 48% of its total revenue is reported from sales outside the United States. The company operates over 134 manufacturing facilities and eight innovation and research centers worldwide.

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1Q17 performance

Johnson & Johnson’s revenue has risen over the past few years following its restructuring of its business segments and the strong performances of a few of its key products, including Xarelto, Zytiga, Remicade, Stelara, and Olysio.

During 1Q17, the company reported growth across all of its segments. The negative impact of foreign exchange partially impacted the growth in its Pharmaceuticals and Medical Devices segments, while foreign exchange had a positive impact on its Consumer segment’s revenue. We’ll discuss the revenues and performances of JNJ’s blockbuster drugs during 1Q17 in the coming articles.

To divest company-specific risk, investors can consider ETFs such as the Fidelity MSCI Healthcare Index ETF (FHLC), which holds 8.8% of its total assets in Johnson & Johnson. FHLC also holds 6.7% of its total assets in Pfizer (PFE), 5.3% in Merck & Co. (MRK), and 3.1% in Bristol-Myers Squibb (BMY).


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