Despite Profit Trim, J&J Wins Over Wall Street And Retail Investors: What’s Going On?

Johnson & Johnson (JNJ) 's quarterly results on Wednesday kept both Wall Street and the retail segment happy despite some minor worries. 

While its pre-market share price dipped, presumably as the company trimmed its full-year profit outlook, things turned positive in opening trading as the stock rose 3.70% to $156.63.

The Stocktwits sentiment score was bullish (70/100), and message volume hit its highest this year (95/100). So, what's behind the surge?

On the surface, things look rosy. J&J beat analyst estimates for both second-quarter profit and revenue. Sales of powerhouse drugs like Darzalex (cancer treatment) and Stelara (psoriasis) exceeded expectations, per Reuters, pushing overall revenue to $22.40 billion (above the $22.30 billion consensus). 

Adjusted earnings per share also landed at $2.82, surpassing the anticipated $2.71.

However, J&J's revised full-year forecast revealed that the company trimmed its profit projections to account for recent acquisitions, including the $13 billion purchase of cardiac device maker Shockwave. 

The Stocktwits community was mostly bullish, as many now lie in wait for JNJ to potentially breach the $160 mark, seemingly unfazed by the lowered outlook. 

This optimism might stem from J&J's impressive track record – the company has beaten earnings estimates for the past four quarters.

There are underlying concerns that could dampen the retail enthusiasm. JNJ's share price is already down 5.60% year-to-date. Investors are worried about two key issues:

1. Stelara's future: This blockbuster drug faces a future with lower-priced competition in both the U.S. and Europe, potentially impacting its sales.

2. Ongoing litigation: JNJ continues to battle legal challenges from people claiming its talc-based baby powder caused cancer.

But for now, both retail traders and the overall market are cheering JNJ’s upbeat results, and this momentum might bring some much-needed respite to the battered stock.

Photo courtesy: Open Grid Scheduler on Flickr
 

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