Healthcare giant Johnson & Johnson (JNJ) is gearing up to release its third-quarter 2024 financials on October 15. Wall Street analysts expect the company to report earnings of $2.21 per share, representing a 17% decrease year-over-year. In contrast, revenues are expected to grow by 4% from the year-ago quarter to $22.17 billion, according to data from TipRanks.
Don't Miss out on Research Tools:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
The decline in Q3 profits could be due to increasing costs from legal cases and acquisitions, an unfavorable product mix, and narrowing margins.
It’s important to highlight that Johnson & Johnson reported strong results in the second quarter, with earnings up 10.2% and revenues rising 4.3% year-over-year. The increase was driven by strength in its Innovative Medicine and MedTech businesses. It remains to be seen whether JNJ can continue its momentum and deliver another record-breaking quarter.
Recent Events to Consider Ahead of Q3
Last month, Red River Talc LLC, a Johnson & Johnson subsidiary, filed for Chapter 11 bankruptcy to settle ovarian cancer claims related to its talc products. With 83% of claimants’ support, the company raised its settlement offer by $1.75 billion, totaling around $8 billion.
According to TipRanks’ Bulls Say, Bears Say tool shown below, bulls contend that JNJ’s proposed $8 billion settlement could resolve nearly all pending talc cases, reducing legal risks for JNJ. However, bears argue that the proposed settlement continues to face legal challenges from plaintiffs opposing the specific terms of the agreement.
In addition to the above, during Q3, JNJ made significant strides in its pharmaceutical division, including the approval of key drugs like talquetamab and aprocitentan. These approvals may have boosted revenues in Johnson & Johnson’s Innovative Medicine segment.
Options Traders Anticipate a Minor Move
Using TipRanks’ Options tool, we can gauge options traders’ expectations for the stock post-earnings report. Based on a $150 strike price, with call options priced at $11.55 and put options at $0.09, the expected price movement, based on the at-the-money straddle is 2.70%.
Is Johnson & Johnson a Good Stock to Buy?
Turning to Wall Street, Johnson & Johnson stock has a Moderate Buy consensus rating based on four Buys and five Holds assigned in the last three months. At $168.43, the average JNJ price target implies 4.32% upside potential. Shares of the company have gained 11% in the past six months.
