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Johnson & Johnson, after weak quarter of vaccine sales, will no longer include it in guidance

Johnson & Johnson never came up with a name for its COVID-19 vaccine. Similarly, it never found a niche for the jab, despite its hype as a convenient single-shot option to the double-dose vaccines from Moderna, Pfizer-BioNTech and AstraZeneca.

“As market demand for all COVID-19 vaccines is currently challenged by global supply surplus and vaccine hesitancy in developing markets, we have made the decision to suspend guidance for sales of our COVID-19 vaccine,” J&J chief financial officer Joseph Wolk, said in a conference call.

J&J’s COVID vaccine sales for the first quarter were $457 million, far off from Wall Street’s estimate of $785 million. In January, when the company reported that 2021’s vaccine sales reached $2.4 billion, it projected 2022 sales to come in at between $3 billion and $3.5 billion.

“There is significant uncertainty about the duration and contemplated impact of the COVID-19 pandemic and other marketplace dynamics,” J&J’s investor relations chief Jessica Moore said.

As a result, J&J has reduced its overall revenue projection for 2022, forecasting a range of $94.8 billion and $95.8 billion. Three months ago, the company was expecting full-year revenue of between $95.9 billion and $96.9 billion. J&J also adjusted earnings per share to $10.15 to $10.35, down from a range of $10.40 to $10.60.

However, there were several positive signs for J&J. For one, its earnings per share of $2.67 topped the expectations of Cantor Fitzgerald by $0.51. The analysts believe the trend will continue thanks to “above-market growth in its key franchises,” Grace Chen wrote in a note to clients.

Cantor Fitzgerald also pointed to total sales growth of 5% for the quarter to $23.4 billion and operational growth of 7.7%, “demonstrating strong performance across the enterprise despite macro-economic headwinds.”

The analysts also pointed to adjusted operational pharmaceutical sales—which exclude the impact of acquisitions, divestitures and translational currency—grew 9.3%, which was 3% to 4% above the market rate with the credit going to sales of Darzalex ($1.86 billion/up 36%), Tremfya ($590 million/up 41%) and Erleada ($400 million/up 53%), all of which beat FactSet estimates.

The earnings report comes as J&J is undergoing a separation of its consumer health business. Wolk said that J&J will divulge the new name, location and leadership for the consumer health business in the middle of this year.

The unit had sales of $3.59 billion in the first quarter, a drop from $3.64 billion in the first quarter of 2021. J&J’s Medtech unit generated sales of $6.58 billion, a 5.9% increase on its first-quarter showing from last year.

“Although their medical devices unit continues to suffer from COVID-19 headwinds, we can expect the market to recover throughout 2022,” Third Bridge analyst Mikaela Franceschina said. “With the company’s plan to spin off their consumer health business, addition of new partnerships and robust pipeline, the company should continue to see success despite any potential setbacks with competitive pressures and supply chain constraints.”