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What Drove Johnson & Johnson’s Growth in 2Q17

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Jul. 21 2017, Updated 9:15 a.m. ET

Johnson & Johnson’s growth rate

As discussed earlier, Johnson & Johnson (JNJ) reported an increase of ~2.9% in revenue to $18.8 billion in 2Q17, compared with $18.5 billion in 2Q16.

The above graph compares the growth rate and impact of foreign exchange on Johnson & Johnson’s total revenue over the last few quarters. Foreign exchange has had a substantial impact on the company’s overall revenue, as ~48% of it is from sales outside the United States. The company has 134 manufacturing facilities and eight innovation and research centers worldwide.

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Performance in 2Q17

Johnson & Johnson’s revenue has risen over the past few years following the restructuring of its business segments and strong performance of key products Xarelto, Stelara, and Olysio, among others. In 2Q17, it missed Wall Street analysts’ revenue estimate of $19 billion and reported revenue of $18.8 billion, a 2.0% growth from the $18.5 billion it saw in 2Q16.

In 2Q17, the company saw operational growth across all three of its segments, while foreign exchange partially impacted its operational growth. Revenue for the pharmaceutical segment fell ~0.2% in 2Q17, while the consumer segment’s and medical device segment’s revenue rose 1.7% and 4.9%, respectively. The company’s segment-wise revenue and the performance of its blockbuster drugs will be discussed later in this series.

To divest company-specific risks, investors could consider the iShares US Healthcare ETF (IYH), which has a 10.8% exposure to Johnson & Johnson. IYH also has a 6.8% exposure to Pfizer (PFE), a 3.4% exposure to AbbVie (ABBV), and a 3.0% exposure to Gilead Sciences (GILD).

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