Johnson & Johnson (JNJ), the global pharmaceutical and healthcare leader, is set to release its third-quarter earnings on October 15, before the market opens. While analysts forecast strong financial performance, with earnings per share (EPS) expected to be $2.21 and revenue of $22.16 billion, recent news about the company’s MedTech acquisitions and drug trial setbacks have raised concerns.
MedTech Growth Amid Drug Trial Setback
J&J recently completed the acquisition of V-Wave, expanding its MedTech portfolio with a new minimally invasive cardiovascular treatment. The Ventura Interatrial Shunt is designed to strengthen J&J’s role in addressing heart failure. However, the acquisition comes at a short-term cost. The company projects that the acquisition will dilute adjusted EPS by about 24 cents in 2024 and 6 cents in 2025, a factor that will likely be addressed in the earnings report.
Simultaneously, the company discontinued its Phase 3 SunRISe-2 trial, which aimed to test a treatment for muscle-invasive bladder cancer. The trial failed to show superiority over chemoradiation, leading to its termination. Despite this, J&J remains optimistic about the TARIS platform, with a potential market value of $5 billion.
Stock Performance: Mixed Signals in the Market
Despite positive developments in the MedTech sector, J&J stock has seen limited gains in 2024. It’s up just 0.93% year-to-date and 2.49% over the past year. However, in the last six months, the stock has gained 9.40%, indicating slow but steady recovery.
At $161.46, JNJ stock is trading slightly above its eight-day simple moving average (SMA) of $160.48, signaling a positive trend. Yet, it lags behind its 20-day and 50-day SMAs of $162.32 and $162.53, respectively, pointing to ongoing selling pressure.
The Moving Average Convergence/Divergence (MACD) indicator is currently at a negative -0.72, suggesting bearish momentum. Meanwhile, the Relative Strength Index (RSI) is at 47.83, showing neutral market conditions. JNJ’s stock is trading within the lower range of its Bollinger Bands ($157.98 to $168.05), which may indicate a potential bounce, though caution is advised.
Q3 Earnings: Will J&J’s Strategy Drive Long-Term Growth?
All eyes will be on J&J’s upcoming third-quarter earnings report, as investors look for updates on the company’s guidance after the V-Wave acquisition and the performance of its MedTech and Innovative Medicine segments. While JNJ stock charts don’t signal a strong bullish trend, its strategic moves in MedTech and a promising product pipeline may provide long-term growth potential. Investors will closely analyze the earnings results to determine whether J&J can overcome recent challenges and drive stock recovery.
