Healthcare space is greatly befitting from the current favorable industry trends and robust performances by major drug companies in both pharma and biotech segments. This trend is further confirmed by the healthcare giant Johnson & Johnson’s (NYSE:JNJ) stronger-than-expected results for the fourth quarter.
Johnson and Johnson Results in Focus
Earnings per share came in at $1.24, beating the Zacks Consensus Estimate of $1.20 and improving from the year-ago earnings of $1.19 per share.
Revenues rose 4.5% to $18.36 billion, trumping the Zacks Consensus Estimate of $17.9 billion, despite the negative impact from currency fluctuations. The robust performance was driven by higher drugs sales and improved medical devices sales.
However, the company guided lower for 2014 as it sees earnings in the range of $5.75–$5.85 per share. Though this number is above 2013 reported earnings of $5.52 per share, it is slightly below the Zacks Consensus Estimate of $5.87 per share.
The weak guidance led to the 2.5% slump in JNJ shares in early hour trading but recovered slightly to down 1.1% at the close on solid results. This mixed performance puts healthcare ETFs in focus for the coming days, especially the funds having double-digit allocation to this baby products and biological drugs maker.
Investors should closely monitor the movement in these funds and could catch the opportunity from any surge in the JNJ pric. (see: all the Healthcare ETFs here).
ETFs in Focus
Health Care Select Sector SPDR Fund (NYSEARCA:XLV)
The most popular healthcare ETF on the market, XLV follows the S&P Health Care Select Sector Index. This fund manages about $8.7 billion in asset base and trades in heavy volume of roughly 5.7 million. Expense ratio came in at 0.18% annually. In total, the fund holds about 57 securities in its basket. Of these firms, JNJ takes the first spot, making up roughly 12.14% of the assets.
Pharma accounts for 45% share from a sector look while biotech, healthcare providers and services, and equipment and suppliers make up for double-digit exposure. The fund added 3.5% in the year-to-date time frame and has a Zacks ETF Rank of 2 or ‘Buy’ rating with a ‘Low’ risk outlook.