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Will JNJ’s Medical Device Segment Momentum Continue in 3Q17?

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Overview

Johnson & Johnson (JNJ) registered revenues of $18.8 billion in 2Q17, a YoY (year-over-year) increase of around 1.6%. However, the results failed to meet analysts’ estimates. The weak pharmaceuticals sales and a decline in the company’s consumer business sales affected the company’s performance in the quarter. However, Johnson & Johnson’s medical device segment reported strong sales growth of around 4.9%. The medical device business has since witnessed further developments that could boost the segment’s growth in 3Q17.

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With the acquisition of the Abbott Medical Optics business by Johnson & Johnson in February 2017, J&J strengthened its vision care business. In 2Q17, around $25 million of the company’s sales were generated through the acquired business line of products. Easier comparables and new product launches in 3Q17 will further drive the company’s medical device segment sales in 3Q17.

3Q17 company guidance for medical device business segment

Johnson & Johnson continues to focus on restructuring initiatives to turn around the ailing medical device business. In 3Q17, the company expects to generate sales of 5.5% to 6% on an operational basis. Some of the recent launches including viper line extensions, One Touch insulin pump, and its expandable cage device are expected to add to the company’s sales in 3Q17.

Investors can get exposure to J&J while diversifying the company-specific and industry-specific risks by investing in the Vanguard Total Stock Market ETF (VTI).

Peers Zimmer Biomet Holdings (ZBH), Thermo Fisher Scientific (TMO), and Medtronic (MDT) could register revenue growth of -0.20%, 12%, and -6%, respectively, in their recently ended quarters.

Next, we’ll look at the company’s recent launches.

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