Income · Stocks to Consider and Updates

Johnson & Johnson Posts Strong Results on Pharmaceutical Sales

JNJ Healthcare giant Johnson & Johnson (NYSE: JNJ – $116.10) reported that third-quarter earnings and revenues exceeded estimates. Adjusted earnings were $1.68 a share, up from $1.49 the prior year and topping forecasts for $1.66 a share. Revenues came in at $17.82 billion, up from $17.10 billion last year, beating expectations of $17.74 billion. Domestic sales rose 6.7% while international sales increased 1.5% despite a negative currency impact of 0.2%, the company said.

       Global pharmaceutical sales in the third quarter increased 9.2% from the prior year as domestic sales jumped almost 12% and international sales added 5.4%. The increase was due to strong growth in new products such as Imbruvica used to treat blood or lymph node cancers; Darzalex to treat multiple myeloma; and Xarelto, an oral anti-coagulant. The company’s Remicade franchise, however, is currently under attack from Pfizer. Sales of the rheumatoid-arthritis treatment surged 18% worldwide in the latest quarter and the company is challenging Pfizer for patent infringement. The company’s other segments, however, continued to lag. During the quarter, sales of J&J consumer health products slipped 1.6% to $3.26 billion, dragged down by currency headwinds. Meanwhile, J&J’s medical device sales rose just 1.1% to $6.16 billion as the company has exited certain areas, reframed how it sells devices and is concentrating on high-growth categories like robotics and staplers.

      The company maintained its sales guidance for the full year of $71.5 billion to $72.2 billion, straddling estimates for $72.14 billion and increased the bottom-half of full-year earnings, now expected from $6.68 to $6.73 a share from prior guidance of $6.63 to $6.73. Analysts have guidance pegged at $6.69 a share. Next year is shaping up to be a solid one for the company’s bottom line. In the pharmaceutical sector, Remicade, Imbruvica, Simponi and Endurant are all expected to do well, notwithstanding the Pfizer threat. The consumer sector, which has dipped in the last two quarters, should get back on track with its mainstay products, including Tylenol, Motrin and Listerine. Shares of JNJ are declining about 2% in today’s trading, but the stock is up over 24% over the past year and was subject to some profit taking. Nonetheless, shares can continue to be held in conservative income accounts.


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