Johnson & Johnson ($JNJ) saw shares plunge on Friday, July 12 after a Bloomberg report revealed that the company is under criminal investigation in the US for its handling of allegedly cancer-causing talc powder.
The company has also reduced job postings internationally - along with a number of other companies in the healthcare and consumer health space - and as it heads toward its second quarter earnings report on Tuesday, July 16, questions linger about the broader health of the asset class. But now, dark clouds that accompany federal prosecutors will hang over J&J during and after its earnings call.
Analysts tracked by Zacks Investment Research predict EPS of $2.42 for the New Jersey-based pharmaceutical, devices and consumer health company. But these estimates were analyzed prior to Bloomberg's report regarding the investigation. After years of rising headcount, Johnson & Johnson is posting fewer jobs internationally, but maintaining hiring in the US. Still, fewer job postings may suggest slower growth.
Johnson & Johnson reduced job postings 16% from their second quarter high, down to 1,590. The company has cut total job postings 31% from their peak this year. J&J saw job postings rise, briefly, to begin this quarter but then postings continued a downtrend that has been the case for more than a year. The company added jobs from 2018 to 2019, according to its annual report, so some of the roles that were removed from the web may simply have been filled with new staffers before this year began.
Johnson & Johnson is the top holding in a popular healthcare index, the Healthcare Select Sector SPDR Fund, which has underperformed the S&P 500, a broader market indicator, so far in 2019. So has J&J, this year. And a number of other top holdings in the fund are also reducing job postings - possibly a sign that after a years-long bull run for the healthcare and consumer health sector, the tide may finally be beginning to turn on growth. Many leading US healthcare and consumer health companies - J&J among them - saw shares rise substantially in the first half of the 2010s, buoyed higher as President Barack Obama's domestic healthcare initiative channeled more spending in the sector.
Our next chart tracks job postings at Bristol Myers Squibb ($BMS) hiring, which is down more than 50% year-over-year; over the same timeframe, its shares (green line) have fallen by about 25%. It, too, is in the Healthcare Select Sector SPDR Fund.
For Johnson & Johnson, culling international listings has been the key driver of job posting reductions - including in China, where a number of leading American healthcare and consumer health companies pulled back on hiring amid the US-China trade war. Alternative data reveals the company scaled back growth elsewhere - not just in China, but in other countries, including Germany, Great Britain and Japan over the last 90 days. In somewhat of a surprising twist, the company added slightly more job postings in the US over the second quarter.
Johnson & Johnson cut back on job postings for Regulatory Affairs roles this quarter, posting a decline of 40% for the quarter, from 40 open jobs to 24. Further, as our next chart shows, the company has almost totally eliminated job postings for positions in Trade Relations. The sum of the alternative data suggests Johnson & Johnson is pulling back to the US amid global trade tensions - although, now, it may face an even bigger problem with prosecutors in America.
About the Data:
Thinknum tracks companies using information they post online - jobs, social and web traffic, product sales and app ratings - and creates data sets that measure factors like hiring, revenue and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.
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