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Stock Watch: J&J’s Q1 Earnings Untroubled By The IRA

Initial Earnings Euphoria Gives Way To Realism But IRA Impact Negligible

 
• By Andy Smith

J&J’s Q1 earnings announcement included challenges like the loss of exclusivity and competitive pressures, but the price renegotiation associated with the Inflation Reduction Act was not among them.

Stock Watch Image, Andy Smith
ANDY SMITH OFFERS A LIFE SCIENCE INVESTOR'S PERSPECTIVE ON BIOPHARMA BUSINESS

A sense of gloom preceded Johnson & Johnson’s (J&J’s) first-quarter results announcement, which opened earnings season for life science companies. The rising interest rates that scuppered Silicon Valley Bank have also raised the hurdle rate for virtually any investment.

This reminded me of the time I reported the results of the biotech fund I ran – which were positive, but not stellar – and an investor commented that he might as well have just held treasuries. The implication was that moving up the risk profile from assets like government bonds (the yields of which have been rising in an attempt to tame inflation) to biotech should be accompanied by higher returns to compensate investors for taking more risk

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