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Earnings Outlook: Johnson & Johnson has a brand new CEO and a plan to separate the corporate in two. Right here's what else to anticipate from J&J's earnings

Johnson&Johnson
JNJ,
-0.26%
has long been viewed as a flagship stock for other healthcare companies, given its early spot on the earnings calendar and a business model that includes everything from hip implants to rheumatoid arthritis drugs and patches.

Next Tuesday, when the company reports its fourth-quarter results, investors will also be listening to what Joaquin Duato, a longtime J&J executive who became CEO earlier this month, has to say about the company's direction.

Duato replaces Alex Gorsky, who began his career as a J&J sales representative before being named CEO in 2012. Gorsky succeeded Bill Weldon as CEO when the company was mired in the midst of quality issues with several products including Tylenol and metal-on-metal hip implants that had tarnished J&J's once-great brand. (Gorsky remains CEO.)

The company's stock has risen steadily over the past decade, hitting a 10-year high of $179.47 on August 17, compared to a 10-year low of $61.78 on June 1, 2012.

"I want investors to think we're moving forward," Duato said Jan. 10 at the virtual J.P. Morgan Healthcare Conference, according to a FactSet transcript of the meeting.

J&J announced in November that it would split into two public companies: one will focus on consumer health, and the other will house its prescription drug and medical device businesses. ("Pharma remains J&J's strongest segment," Raymond James analyst Jayson Bedford told investors in November.) The split isn't expected to happen until late 2023.

Duato also said at the conference that the pandemic has accelerated trends like same-day delivery in consumer health. This likely further differentiates the consumer health store from the traditional pharmaceutical and device stores.

But that's not the only way the pandemic is affecting the company's business.

Sales of medical devices have collapsed or collapsed depending on the state of the pandemic, as many of the products sold are used in elective medical procedures. When hospitals are overwhelmed with COVID-19 patients, they sometimes have to reduce or stop elective surgeries.

"Although the COVID impact has disrupted the entire medtech market and we saw more of that disruption in the fourth quarter with the Omicron variant, as I'm sure many of the medical device companies will comment on, we've had that again this year persistently done Given the COVID circumstances, our goal was to keep improving our competitiveness,” Duato said at the conference.

However, expect deals from a J&J led by Duato, who described "external innovation or M&A" as a key element of the company's growth in pharmaceuticals and medical devices. (The company favors small and mid-sized deals so it can leverage its own trading and manufacturing expertise. "That was Johnson & Johnson's secret ingredient," Duato said at the event. "But are we open to (big Deals)? Yes. Do we have the financial strength to perform then? Absolutely, yes.")

J&J's COVID-19 vaccine has largely fallen out of favor in the U.S., accounting for less than 4% of total doses administered here. The majority of people in the US have been vaccinated with BioNTech SE
BNTX,
-3.96%
/Pfizer Inc.
PFE,
-1.11%
and Moderna Inc.
mRNA,
-6.63%
shots.

Here's what you can see in J&J's earnings:

Merits: The consensus estimate from analysts polled by FactSet is earnings per share of $2.15, up from 66 cents a share a year ago.

Estimize, which crowdsources estimates from a range of parties including buy- and sell-side investors, academics, students and more, expects earnings per share of $2.31.

Sales: According to FactSet, revenue is expected to be $25.3 billion in the fourth quarter of 2021, up from $22.5 billion a year ago. That equates to $3.7 billion in consumer health sales, $14.5 billion in pharmaceuticals business and $6.9 billion in medical device sales.

Estimize expects sales of $25.2 billion.

Share: J&J stock is up 2.6% over the past year, while the S&P 500 is up about 21.4% since that time last year.

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