Shares of Johnson & Johnson (NYSE:JNJ) slid in trading Tuesday after the pharma giant’s first-quarter earnings results were met with mixed reactions from investors.
As the sell-off continues, investors focused on large-cap pharma companies may want to move their money into stronger options this earnings season.
JNJ Earnings Beat Is Not Enough for Investors
For the first quarter, Johnson & Johnson posted earnings of $1.83 per share, beating the Zacks Consensus Estimate of $1.77. Revenues, on the other hand, came in below expectations. Johnson & Johnson posted quarterly revenues of $17.8 billion, which missed our consensus estimate of $18.0 billion.
The company’s Worldwide Pharmaceutical segment grew 0.8% year-over-year, with domestic pharma sales slipping 1.3% and international pharma sales growing 4.1%. J
Johnson & Johnson also said that its recent purchase of Actelion Ltd (OTCMKTS:ALIOF) should close in the second quarter.
Like many of its peers, Johnson & Johnson is facing generic competition and pricing pressure for some its pharma products, especially in the United States.
Tuesday’s price action most likely reflects investors’ hesitation towards the company’s slumping domestic sales figures.
Consider These Other Pharma Stocks to Buy
Johnson & Johnson is often considered a bellwether for the large-cap pharma industry, and while its earnings beat is hopefully a sign of things to come, there appear to other companies that are better positioned to post strong results this quarter.
One company to consider is Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY).
This Swiss healthcare giant has a strong presence in the cancer, immunology, infectious diseases, and ophthalmology markets. The company has a deep pipeline and is working to build up its offerings in immuno-oncology market.
Roche has key data readouts lined up for 2017 and has already gained FDA approval for an important drug Ocrevus (MS) this year. The stock has outperformed its industry peers so far this year, and its Zacks Rank #1 (Strong Buy) pairs well with its “B” grades for Growth and Momentum headed into its earnings announcement.
Another stock to look at is Sanofi SA (ADR) (NYSE:SNY).
Sanofi has averaged an earnings beat of 4.77% over the last four quarters, and its fundamental metrics make it appealing for value-minded investments. Its Forward P/E ratio of 14.44 outpaces the industry average of 15.5, and its P/S ratio of 3.0 comes in better than the industry’s 4.1. Moreover, the P/B ratio for Sanofi is 1.8, less than 4.3 for the industry. These metrics have helped the stock earn an “A” grade for Value.
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