Analysts expect 3.0% growth in Johnson & Johnson’s (JNJ) 1Q17 revenue at ~$18.01 billion. The growth is expected to be driven by the strong performance of few of its key products including Xarelto, Zytiga, Remicade, Stelara, and Olysio among others. It will be partially offset by the negative impact of foreign exchange.
The above chart shows actual revenues and analysts’ estimates for Johnson and Johnson since 1Q15 as well as estimates for 1Q17. There are various factors that support the expectations for future revenues. We’ll discuss the factors in this series.
Segment-wise expectations 1Q17
Johnson & Johnson’s business is divided into three business segments:
- Medical Devices and Diagnostics
- Consumer Healthcare
The Pharmaceuticals segment contributes ~46.5% of Johnson & Johnson’s total revenues. The segment is expected to report operational growth for 1Q17—considering its strong portfolio of oncology and immunology products. However, the segment’s growth might be impacted by lower sales of Hepatitis C products under the infectious disease franchise and lower Invega sales.
The Medical Devices segment contributes ~35% of Johnson & Johnson’s total revenues. The segment is expected to report operational growth in 1Q17, driven by a strong performance from the advanced surgery, vision care, and orthopedics franchise. The growth will be partially offset by lower sales of cardiovascular and diabetes care products.
The Consumer segment contributes ~18.5% of Johnson & Johnson’s total revenues. The company acquired NeoStrata in April 2016 for its skin care products franchise. In 1Q17, the Consumer segment’s revenues are expected to be driven by over-the-counter products, oral care products, and beauty products. Lower sales of baby care, women’s health, and wound care products will offset the segment’s growth.
To divest the risk, investors can consider ETFs like the iShares S&P Global Healthcare ETF (IXJ), which holds 7.7% of its total assets in Johnson & Johnson. The iShares S&P Global Healthcare ETF holds 4.4% of its total assets in Merck and Co. (MRK), 3.1% in Amgen (AMGN), and 4.9% in Pfizer (PFE).