• Stock up 5% year to date ahead of Q2 report
  • Revenue and EPS expected to top estimates
  • Focus on COVID-19 vaccine business and medical devices segment

Johnson & Johnson stock (NYSE: JNJ) is scheduled to report its second-quarter results on July 21, 2021. It is poised to be the center of attention given that the company has established an impressive track record when it comes to toping projections in recent quarters. Additionally, it is the world’s largest maker of healthcare products, has also made a name for itself on the vaccination front with a COVID-19 jab.

The stock is up by more than 5% for the year, having underperformed the S&P 500, which is up by about 10%. Additionally, the stock is down by about 5% from all-time highs and in dire need of new catalysts to rerate higher.

Johnson & Johnson stock chart

Conversely, the second quarter report might be the catalyst to strengthen investors’ confidence in Johnson & Johnson stock. Given that the company boasts of an average surprise in the past two quarters, there is a high probability it could top predictions.

When the company reports, COVID-19 vaccine revenue should arouse interest. The opening of the global economy is also expected to impact the company’s medical devices sales.

Q2 expectations

When Johnson & Johnson reports, oncology and immunology drugs are expected to be the key driver of the bottom line at the back of a rebound of the company’s medical device sales. Consequently, revenues are expected to come in at $22.3 billion above projections of $22.2 billion. While medical devices revenue was up by 11% in Q1, it will be interesting to see if the momentum continued in Q2.

JOHNSON & JOHNSON Q2 expectations

On the other hand, earnings per share are expected at $2.30 above estimates of $2.27 a share. Net income in the first quarter totaled $6.9 billion, reflecting a 12% year-over-year increase; waiting to see if the growth trajectory continued in the second quarter.

What to look out for

When Johnson & Johnson reports, the focus will be on the company’s cancer drugs led by Imbruvica and Darzalex. While the focus has been on the sale of the COVID-19 vaccine, cancer drug sales are still a key component in driving top-line growth.

Last year, Johnson & Johnson felt the full force of postponement of elective surgeries due to the COVID-19 pandemic. Consequently, the company’s medical devices segment suffered a big blow on reduced orders from hospitals. Therefore, it will be interesting to see if the segment did bounce back on the reopening of the economy, which resulted in a spike in elective surgeries.

When the company unveiled its COVID-19 shot in March, it faced headwinds due to manufacturing bottlenecks. Reports of people developing serious blood clots also aroused concerns. Consequently, it will be interesting to see the company’s progress on this front when it reports. The focus will also be on the international markets given the low levels of vaccination which presents tremendous opportunities for the company.

Amid the uptick in the medical devices business, the market waits to see if the company will raise its 2021 guidance. Currently, the company expects its full-year earnings to range between $9.42 and $9.57 on sales of about $91.6 billion.

Bottom line

Johnson & Johnson heads into the second quarter earnings session as a leader in the healthcare sector. The company boasts of a diverse revenue base made up of oncology & immunology drugs, COVID-19 vaccine pipeline, and medical devices revenues. Additionally, it boasts of a robust pipeline and an impressive cash flow generation.

Consequently, the outcome of the second-quarter report could have a huge say on how the stock performs after a 5% pullback from all-time highs.