JNJ: 3 Stocks Set to Soar from the Second Wave of Covid-19

The number of COVID-19 cases is rapidly rising across the globe. In the United States, more than 87,000 cases were reported yesterday, which is a new high. European countries like Germany and France are headed for the second phase of a nationwide lockdown. The University of Washington has forecasted that the US death toll from COVID-19 could touch 500,000 by February 2021.

It is evident that the second wave of coronavirus is creeping around and it could again bring the world to a halt. High quality healthcare complemented by an agile and accurate diagnostic system is the need of the hour. So is the requirement for top notch virtual health care or telehealth services.

Reports and Data forecast that the global Rapid Test market is expected to increase at a CAGR of 8.8% to $48.5 billion by 2026. The potential of telehealth is also strong in the current scenario. According to the Harris Poll, more than 75% of those availing telehealth services in the United States would continue to do so even after the pandemic.

Johnson (JNJ), Abbott Laboratories (ABT), and Teladoc Health, Inc. (TDOC) are some of the healthcare companies that have already been thriving because of the pandemic. Being active players in the diagnostic and telehealth services, these companies are likely to gain further momentum with the second wave of COVID-19.

Johnson & Johnson (JNJ)

JNJ primarily focuses on the consumer segment, however, it also has a major presence in the pharmaceutical as well as the medical devices segments. While the consumer segment focuses on baby care, women’s health, and wound-care, the pharmaceutical segment deals in immunology, neuroscience, pulmonary hypertension, infectious diseases and vaccines, oncology, and cardiovascular diseases. JNJ’s medical segment deals with surgery, orthopedic, diabetes care, cardiovascular, and eye health fields.

Last week, J&J announced that it would resume phase 3 clinical trials of its experimental COVID-19 vaccine, JNJ-78436735, in the United States. Meanwhile, in India, the Central Drugs Standard Control Organization (CDSCO) gave a nod to human trials of JNJ’s Covid-19 vaccine candidate in association with India-based Biological E.

JNJ has shown an impressive rebound in the third quarter that ended September 2020. The company’s revenue for the quarter edged 1.7% higher to $21 billion. Revenue for its consumer products segment recovered, while revenue for the medical devices segment slipped 3.6%. However, its pharmaceutical segment stood resilient, thanks to strong momentum of its blockbuster drugs, Darzalex, Stelara, Zytiga, and Imbruvica. Meanwhile, JNJ’s EPS for the third quarter doubled year-over-year to $1.33.

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The street estimates its fourth-quarter revenue to be $21.7 billion, indicating a 4.7% rise year-over-year. Meanwhile, EPS for the quarter is likely to drop 2.7% to $1.83. Over the past year, JNJ gained 7.1% to close yesterday’s session at $137.19.

How does JNJ stack up for the POWR Ratings?

B for Buy & Hold Grade

A for Peer Grade

B for Overall POWR Rating

The stock is also ranked #9 out of 240 stocks in the Medical – Pharmaceuticals industry.

Abbott Laboratories (ABT)

ABT discovers, delivers, manufactures, and sells a broad line of health care products. The company operates through a plethora of segments such as: Established Pharmaceutical Products, Diagnostic, Cardiovascular Products, Nutritional Products, Neuromodulation Products, and Others. The company manufactures close to 1,500 products. Some of its flagship products include Similac, Pedialyte, Glucerna, Ensure, FreeStyle Libre, ZonePerfect, i-STAT and MitraClip. ABT operates across 77 countries and has 31 manufacturing sites.

ABT delivered a 9.6% year-over-year rise in its revenue to $8.9 billion, led by the new product pipeline in its Diagnostic and Medical Device segment. Some of these products include FreeStyle Libre 3, Libre Sense Glucose Sport Biosensor, and the MitraClip G4 heart device. In August, ABT also received FDA Emergency Use Authorization for its BinaxNOW™ COVID-19 rapid test, which gives results in just 15 minutes. The company indicated that it earned revenue of $881 million from its Covid-19 diagnostic-testing related sales. ABT also revealed to have sold over 100 million Covid tests during the quarter.

The consensus estimate for ABT’s revenue for the fourth quarter that ended December 2020 is nearly $10 billion, indicating a 19.9% increase year-over-year. Meanwhile, EPS is expected to grow 43.2% year-over-year to $1.36. ABT has an upbeat outlook and raised guidance for its full-year EPS to at least $3.55 from the previous forecast of $3.25.

On a year-to-date basis, ABT rose 22.5% to close at $105 yesterday. During the past six months, the stock has gained 16.4%.

ABT’s POWR Ratings reflect this promising outlook. It has an overall rating of “Buy,” with an “A” in Trade Grade and Peer Grade and a “B” in Buy & Hold Grade. Among the 240 stocks in the Medical – Pharmaceuticals industry, it’s ranked #11.

Teladoc Health, Inc. (TDOC)

TDOC is a leading virtual healthcare provider. It is one of the unique companies which provides its services through a technology platform such as mobile devices, internet, phone, laptop, and more. This telehealthcare company focuses on medical subspecialties such as episodic needs like flu and chronic infections to complex diseases like cancer and congestive heart failure. Besides telemedicine, TDOC also specializes in AI and analytics as well as medical opinions. The company also offers licensable platform services.

In August, the company announced its merger with Livongo (LVGO), a renowned Applied Health Signals company. Experts believe that this association would catapult TDOC’s position as the topmost customer-centric healthcare company in the world. CEO of TDOC, Jason Gorevic, said, “With the addition of Livongo later this year, we will be creating a new category of whole person virtual care that will transform how people live healthier lives.”

TDOC’s revenue for the third quarter that ended September 2020, surged 109% year-over-year to $288.8 million. Total visits to its platform also surged 206% to 2.8 million for the quarter. The company’s loss per share widened to $0.43 from $0.28 posted in the same period last year.

The street estimates revenue for the fourth quarter that ended December to be $288.1 million, indicating an 84.1% increase year-over-year. Analysts also expect the loss per share to narrow to $0.34 for the fourth quarter. The company also raised its guidance for full year revenue to $546-$550 million from the previous forecast of $538-$545 million.

TDOC rallied 171.1% on a year-to-date basis to end yesterday’s session at $217.9, led by rising demand for telehealth services amid the pandemic. The stock surged 25.8% over the past six months.

TDOC’s POWR Ratings reflect its promising outlook. It has an overall rating of “Strong Buy” with a grade of “B” in Trade Grade, Peer Grade, Buy & Hold Grade, and Industry Rank. Among the 70 stocks in the Medical – Services industry, it’s ranked #12.

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JNJ shares were trading at $135.49 per share on Friday morning, down $1.70 (-1.24%). Year-to-date, JNJ has declined -5.25%, versus a 2.13% rise in the benchmark S&P 500 index during the same period.

About the Author: Namrata Sen Chanda

Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...