J&J, Other Q1 Financials Beg the Question: What Does It Mean to Miss Expectations?

earnings

Pictured: An illustration of human hands holding up a yellow arrow showing an upward trend/iStock, Cristina Gaidau

This week marked the start of the biopharma earnings season for the first quarter of 2024, with Johnson & Johnson reporting financial results. As I opined in a column two months ago, it’s not my favorite time of the year. My gripe is that biopharma’s quarterly reporting is often predictable, with a low bar for companies to beat Wall Street earnings and revenue estimates. And how fun is that? Well, for investors in those situations I guess it can be.

J&J is always the first out of the gate for earnings season, serving as a bellwether for the industry. The company on Tuesday reported mixed results for Q1 2024 as it beat estimates for earnings but missed the same for sales. I won’t bore you here with all the financial numbers, but here’s one: J&J’s total revenue was $21.38 billion, missing the consensus estimate of $21.44 billion by a slight margin, according to Visible Alpha. 

BioSpace’s headline for its article on the company’s latest quarterly results declared: J&J Narrowly Misses Q1 Revenue on Lower-Than-Expected Stelara Sales. The operative word there is “narrowly”—operational sales came in just 0.03% below estimates.  

Still, the company reached out to BioSpace with questions about this characterization. “Given the scale, [we] believe that analysts would typically characterize as relatively in-line with estimates (given how close) versus a miss,” a J&J spokesperson wrote in an email. “Does BioSpace have a different perspective?” That argument struck me as an “only missed by a fraction” kind of defense from a corporate flack/spin doctor.

First, in response to the assertion that analysts see such results uniformly, I would point to Zacks Equity Research, which also characterized J&J’s sales in Q1 2024 as a miss. I’m not an analyst, but here’s my bottom line as a journalist covering earnings from a business news perspective: If a company’s final sales end up falling short of the consensus analyst estimate, then they have missed their number. They would be close—as in the case of J&J—but ultimately no cigar. If anyone thinks I’m being unfair to J&J or other biopharma companies in this regard, let me know.

Next week, the Q1 2024 earnings season truly kicks into gear, with results expected from AbbVie, AstraZeneca, Bristol Myers Squibb, Gilead Sciences, Merck, Novartis, Roche and Sanofi. AbbVie in the fourth quarter of 2023 beat the analysts’ consensus estimate while raising its long-term sales outlook for two immunology drugs. The real question is how much revenue dropped in Q1 for AbbVie’s Humira, one of the best-selling medicines in the U.S., due to biosimilar competition.     

I’m also interested in how Q1 looked for Novartis and Sanofi. In Sanofi’s fourth quarter of 2023, its earnings lagged behind Wall Street’s expectations due in part to generic competition and despite strong sales of its blockbuster drug Dupixent, while Novartis’ overall net Q4 sales of $11.4 billion fell short of the analysts’ consensus estimate of $11.56 billion—much more than a narrow margin. Tune in next week as we crunch all the latest numbers!  

Greg Slabodkin is the news editor at BioSpace. You can reach him at greg.slabodkin@biospace.com. Follow him on LinkedIn.  

Back to news