Better Buy: Axsome Therapeutics vs. Johnson & Johnson

NYSE: JNJ | Johnson & Johnson News, Ratings, and Charts

JNJ – Axsome Therapeutics (AXSM) and Johnson & Johnson (JNJ) are expected to benefit from the rising number of chronic diseases and continued technological advancements in the pharmaceutical sector. But which of these stocks is a better buy now? Read more to find out….

Axsome Therapeutics, Inc. (AXSM) engages in the development of novel therapies for central nervous system (CNS) disorders. Johnson & Johnson (JNJ) develops, manufactures, and sells various products in the healthcare field worldwide.

An aging population and rising chronic diseases are expected to drive the pharmaceutical sector’s growth. Moreover, the integration of advanced technologies in the drug development process and early detection of diseases should propel the industries’ growth.

Artificial intelligence (AI) trends have significantly improved pharmaceutical manufacturing and patient identification. The global pharmaceutical market is expected to reach $2,067.36 million by 2028, growing at a CAGR of 5.70%.

AXSM has gained 65.1% over the past month versus JNJ’s 3.5% negative returns. Moreover, AXSM is the clear winner with a 76.2% gain versus JNJ’s 2.9% decline in terms of the year-to-date performance.

But which stock is a better buy now? Let’s find out.

Latest Developments

Recently, AXSM announced that the U.S. Food and Drug Administration (FDA) approved AUVELITYTM (dextromethorphan HBr -bupropion HCl) extended-release tablets for the treatment of the major depressive disorder (MDD) in adults.1 AUVELITY is the first and only rapid-acting oral medicine approved for the treatment of MDD with the labeling of statistically important antidepressant efficacy compared to placebo starting at one week.

In June, JNJ announced the launch of the new J&J Satellite Center for Global Health Discovery (Satellite Center) at Singapore’s Duke-NUS Medical School, jointly established by Duke University and the National University of Singapore (NUS) as a graduate-entry medical school and research powerhouse.

Recent Financial Results

During the second quarter ending June 30, 2022, AXSM’s operating expenses increased 55.6% year-over-year to $48.00 million. Its loss from operations grew 27% from its prior-year quarter to $39.81 million, while its net loss grew 28.4% from its year-ago value to $41.44 million. The company’s loss per share rose 23.3% year-over-year to $1.06.

For the second quarter of 2022, JNJ’s sales increased 3% year-over-year to $24.02 billion. Its gross profit improved 2.4% year-over-year to $16.10 billion, while its adjusted net earnings amounted to $4.81 billion. The company’s adjusted EPS came in at $2.59, up 4.4% from its prior-year quarter.

Past and Expected Financial Performance

The company’s EPS is expected to decline 21.5% in the current quarter and 27.7% in the current year but increase 34.3% next quarter. Its EPS is expected to decline at a rate of 49.6% per annum over the next five years.

Analysts expect JNJ revenue to increase 1.4% in the current year and 4% next year. The company’s EPS is expected to grow 6.6% in the next quarter, 2.8% in the current year, and 5.2% next year. Its EPS is expected to grow at a rate of 4.1% per annum over the next five years.

Profitability

AXSM’s gross profit margin of 88.86% compares to JNJ’s 67.95%. However, JNJ’s ROE, ROA, and ROTC of 25.17%, 0.13%, and 14.86% compare with AXSM’s negative 346.11%, 1.24%, and 78.16%, respectively.

Valuation

In terms of forward EV/Sales, AXSM is currently trading at 49.41x, 971.8% higher than JNJ’s 4.61x. Moreover, AXSM’s trailing-12-month Price/Sales ratio of 279.29x is 5958.4% higher than JNJ’s 4.61x.

POWR Ratings

AXSM has an overall rating of D, which equates to Sell in our proprietary POWR Ratings system. In contrast, JNJ has an overall rating of A, which translates to Strong Buy. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

JNJ has an A grade for Stability, in sync with the company’s 0.59 beta. On the other hand, AXSM has an F for Stability, which is justified considering its 1.92 beta. Also, JNJ has a B grade for Sentiment, consistent with the impressive earnings estimates. On the contrary, AXSM has a D grade for Sentiment, given its weak consensus earnings estimates.

Of the 167 stocks in the F-rated Medical – Pharmaceuticals industry, AXSM is ranked #157, while JNJ is ranked first.

Beyond what we’ve stated above, we have also rated both the stocks for Value, Momentum, Stability, and Quality. Click here to view AXSM ratings. Get all JNJ ratings here.

The Winner

While both AXSM and JNJ are expected to benefit from the industry tailwinds, JNJ’s lower valuation, robust financials, and solid growth prospects make it a better buy now.

Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the top-rated stocks in the Medical – Pharmaceuticals industry here.

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


JNJ shares were unchanged in premarket trading Wednesday. Year-to-date, JNJ has declined -0.98%, versus a -12.54% rise in the benchmark S&P 500 index during the same period.


About the Author: Spandan Khandelwal


Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
JNJGet RatingGet RatingGet Rating
AXSMGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Investors in “Wait and See” Mode

Have you noticed that the S&P 500 (SPY) has been trading in a tight trading range of only 6,000 to 6,100 the past few weeks? Steve Reitmeister shares why this is happening along with a game plan for being on the right side of the market action. Read on for the full story...

3 High-Growth SaaS Companies to Watch

The SAAS industry is positioned for continued expansion, owing to the continuous advancements in AI and cloud computing, along with surging global demand. Thus, it could be wise to add high-growth SaaS stocks Twilio (TWLO), Informatica (INFA), and DocuSign (DOCU) to your watchlists. Continue reading…

3 Used Car Stocks Benefiting from High Auto Prices

As rising costs push more buyers toward affordable alternatives, the used car market is seeing strong momentum. Given this backdrop, we think it could be wise to scoop up the shares of fundamentally sound used car stocks Carvana Co. (CVNA), CarGurus, Inc. (CARG), and Cars.com Inc. (CARS). Read more…

3 Airline Stocks Ready for Takeoff as Travel Demand Soars

Global travel is rising, and airline stocks are primed for a major rally. Therefore, to capitalize on this compelling opportunity, investors could consider adding three solid airline stocks, American Airlines Group (AAL), SkyWest (SKYW), and United Airlines Holdings (UAL), to their portfolios. Read more…

Stock Market Alert: History Repeating Itself?

The last time we played around with tariffs was back in 2018 when we started a trade war with China. To say the least that was very negative for stocks as the S&P 500 (SPY) tanked the second half of the year. We need to learn from those history lessons to chart our course for investing in 2025. Read on for more...

Read More Stories

More Johnson & Johnson (JNJ) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All JNJ News