We expect Johnson & Johnson (JNJ - Free Report) to beat expectations when it reports first-quarter 2022 results on Apr 19, before the market open. In the last reported quarter, the company delivered an earnings surprise of 0.47%.

The healthcare bellwether’s performance has been pretty impressive, with the company exceeding earnings expectations in each of the trailing four quarters. It delivered a four-quarter earnings surprise of 7.77%, on average.

Johnson & Johnson Price and EPS Surprise

Johnson & Johnson price-eps-surprise | Johnson & Johnson Quote

J&J’s stock has risen 5.8% this year so far compared with an increase of 8.4% for the industry.

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Factors to Consider

J&J’s Pharma segment is expected to have continued to outperform the market led by increased penetration and new indications across key products such as Darzalex and Stelara.

The Zacks Consensus Estimate for Darzalex and Stelara is pegged at $1.71 billion and $2.43 billion, respectively.

Other core products like Invega Sustenna/Xeplion/Invega Trinza/Trevicta and new drugs, Erleada and Tremfya might have contributed significantly to sales growth. J&J’s single-dose COVID-19 vaccine is also likely to have contributed to sales growth. A booster shot of the vaccine was authorized in October 2021, which is likely to have boosted sales.

Improvement in sales of some other key drugs like Xarelto seen in the past few quarters is likely to have continued into the first quarter. The Zacks Consensus Estimate for Xarelto is $607 million.

Rising competitive pressure in the United States to new oral competition is likely to have hurt sales of a key drug, Imbruvica in the first quarter. The Zacks Consensus Estimate for Imbruvica is $1.13 billion.

Generic/biosimilar competition for drugs like Zytiga, Procrit/Eprex, and Remicade is likely to have hurt the top line.

The Zacks Consensus Estimate for J&J’s Pharmaceuticals unit is $13.8 billion.

With regard to the Medical Devices segment, COVID-19 headwinds and hospital staffing shortages are likely to have continued to hurt procedure volume trends in the first quarter. The Zacks Consensus Estimate for J&J’s Medical Devices segment is $6.8 billion.

In the Consumer Healthcare segment, the improving trend seen in the last couple of quarters is likely to have continued. However, external supply constraints (due to raw material availability and labor shortages) are likely to have continued to hurt sales of the skin health and beauty franchise.

The Zacks Consensus Estimate for J&J’s Consumer Healthcare segment is $3.58 billion.

J&J plans to separate its Consumer Health segment into a new publicly-traded company

Management might announce key executive leadership appointments for the new Consumer Health company on the first-quarter conference call and may also announce the new company name and headquarters location.

On the fourth-quarter conference call, its new chief executive officer (CEO) Joaquin Duato had said the company is taking a more aggressive stance on M&A activity as its strong cash position will help it pursue tuck-in M&A to grow its business. An update is expected on the first-quarter conference call.

Earnings Whispers

Our proven model predicts an earnings beat for J&J in the to-be-reported quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) for a likely positive surprise. This is the case here, as elaborated below.

Earnings ESP: J&J’s Earnings ESP is +1.14% as the Most Accurate Estimate of $2.64 is higher than the Zacks Consensus Estimate of $2.61. 

Zacks Rank: J&J has a Zacks Rank #3