October 29, 2020

Johnson & Johnson falls despite earnings beat after pausing COVID-19 vaccine trial due to unexpected illness

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FILE PHOTO: The Johnson & Johnson logo is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 29, 2019. REUTERS/Brendan McDermid/File Photo  GLOBAL BUSINESS WEEK AHEAD
FILE PHOTO: The Johnson & Johnson logo is displayed on a screen on the floor of the NYSE in New York

  • Johnson & Johnson fell as much as 3% on Tuesday after it temporarily paused its COVID-19 vaccine trial due to an “unexpected illness” in a trial participant. 
  • “Adverse events – illnesses, accidents, etc. – even those that are serious, are an expected part of any clinical study, especially large studies,” Johnson & Johnson said in a statement. 
  • The pause in Johnson & Johnson’s COVID-19 vaccine trial overshadowed its third quarter earnings results released on Tuesday, which beat analyst estimates and included a full-year guidance raise.
  • Visit Business Insider’s homepage for more stories.

Investors are laser-focused on COVID-19 vaccine trials, which became apparent on Tuesday after Johnson & Johnson fell as much as 3% in pre-market trading despite reporting a better-than-expected third quarter earnings report.

On Monday evening, the healthcare giant said it paused its large-scale COVID-19 vaccine trial after a patient in the study became unexpectedly ill.

The company is unaware if the patient is in the placebo arm or the vaccine arm of the trial, and is awaiting a review of the illness from the independent Data Safety Monitoring Board before moving forward.

Johnson & Johnson’s COVID-19 vaccine is being developed by its Janssen Pharmaceuticals unit. The vaccine candidate is in its phase III trial with 60,000 participants.

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While investors soured on the vaccine trial pause, they might find solace in Johnson & Johnson’s better-than-expected third quarter earnings report.

Here are the key numbers:

Revenue: $21.08 billion, versus the $20.2 billion
Adjusted EPS: $2.20, versus the $1.98 estimate

On top of the earnings beat, the company raised its fiscal year 2020 revenue guidance to a range of  $81.2 billion to $82.0 billion from a range of $79.9 billion to $81.4 billion. It raised its adjusted earnings-per-share guidance to between $7.95 and $8.05 from between $7.75 and $7.95.

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The strong earnings results helped pare some of the decline related to the pause in its COVID-19 vaccine trial, but not all, with shares trading down 1% just before the market open.

Investors will likely move Johnson & Johnson out of the penalty box once the temporary pause in its COVID-19 vaccine trial is lifted.

The company reminded investors that an adverse event in a 60,000-patient trial is not out of the ordinary.

“Adverse events – illnesses, accidents, etc. – even those that are serious, are an expected part of any clinical study, especially large studies,” Johnson & Johnson said in a statement.

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