Johnson & Johnson (JNJ -1.03%) quickly emerged as a frontrunner in the early days of the coronavirus vaccine race. But with the vast commercial success of the vaccines developed by rivals Moderna and Pfizer, and the manufacturing delays that Johnson & Johnson faced earlier in the year that significantly hindered its distribution efforts, is the company still a long-term winner in the coronavirus vaccine space?
In this segment of Backstage Pass, recorded on Oct. 19, Fool contributors Rachel Warren and Brian Withers discuss this question, the company's most recent earnings report, and more.
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Rachel Warren: I think one area that investors have been particularly curious about has been when is the company maybe going to be seeing an impact from its COVID vaccine. Management mentioned that they're still projecting about $2.5 billion in COVID-19 vaccine sales in 2021. That was an estimate that they had previously given, so they did not raise that. The company made about $502 million from its vaccine in the third quarter of 2021.
Again, nowhere near the sales that you're seeing from Moderna or Pfizer's vaccines. But Johnson & Johnson is still distributing that vaccine on a not-for-profit basis. That area in particular isn't one I expect to see tremendous growth from for Johnson & Johnson in the near future, but I do think that it could eventually have an impact on their top and bottom line.
The most recent update there was an FDA advisory committee unanimously recommended the vaccine booster by Johnson & Johnson, so an emergency use authorization for that could be forthcoming in the near future. Looking back at the third quarter, I'm really overall very pleased as the share owner of this company.
These are the kinds of quarterly reports, I think, investors are used to by now seeing from Johnson & Johnson. This is a very established company, been in business for well over a century, been paying a dividend for decades.
But it continued to report a really strong quarter even after having these above average growth numbers in the past two quarters as it was rebounding from the headwinds of the pandemic. I think investors as a whole, the market seems to respond positively to its earnings.
Last I checked, I think the stock was up about 2% today. This isn't a stock that's going to make most investors rich overnight, but it's a stock that I think can provide a lot of value with its dividend and stability. I think this quarter was just another excellent one in a long line of really solid quarters for the company.
Brian Withers: That's a really great update, Rachel. Do you mind putting up your slide again? I like how you did the 10-year stock chart, I just wanted to point out something to members.
Warren: Sure, let me pull that up just a little bit bigger.
Withers: You're doing this Johnson & Johnson. When it says total return there, the Johnson & Johnson is purple. That includes returns including dividends. Then the S&P total return is also including dividends.
Interestingly enough, J&J and the market track really, really close together until March of 2020, [laughs] then they separate. It's really interesting that a company that's in the healthcare business has lagged the market during the coronavirus.
I think some of the causes you mentioned are certainly COVID has stopped elective surgeries and things like that. Really some of the other basic businesses that the normal run rate of things, I think, Johnson & Johnson has pared that back.
Warren: Yeah, absolutely. I think it's definitely worth mentioning because you look at some of these other major healthcare companies that have been operating in the vaccine space.
It's interesting though, because companies like Pfizer, Pfizer has arguably had some of the greatest commercial success from its vaccine, and its shares haven't really responded all that much to that commercial success.
Yeah, it's definitely interesting. It hasn't beat the market, but it was trailing pretty close behind it up until the past year plus or so.
Withers: Yeah, awesome. Well, thanks for that update. We're taking questions in Slido as we do every show, sli.do in your web browser. Pop them up there. If we don't get to them this hour, we'll certainly save them for Jason and the crew for "The 5." Thanks so much, Rachel. Appreciate it.