Johnson & Johnson Profits Rise; Forecast Disappoints

JNJ  Johnson & Johnson (NYSE: JNJ – $111.43) posted revenue and profit increases, but the health-care giant released an underwhelming forecast for the year. Sales and earnings gains were driven by its pharmaceutical and medical device businesses and its consumer unit had increased profitability. The company also said it was evaluating potential strategic options, including a potential sale of its diabetes care companies, which had a 3.8% sales decline for the quarter. Sales at J&J’s pharmaceutical business, the company’s largest, rose 2.6% to $8.23 billion, driven by drugs including blood-cancer drug Imbruvica, arthritis treatment Simponi, blood thinner Xarelto and multiple myeloma drug Darzalex. J&J’s medical devices business posted sales growth of 0.2% to $6.44 billion. In its consumer products division, sales grew 3.4% to $3.43 billion. In all for the period, J&J posted an adjusted profit equal to $1.58 per share, up from $1.44 a share in the same period a year before and two cents ahead of Street expectations. Revenue rose 1.7% to $18.12 billion, missing consensus of $18.26 billion.

      The New Brunswick, N.J., health care company said it expects earnings for the year of $6.93 to $7.08 a share and revenue of $ 74.1 billion to $74.8 billion. Analysts expected earnings per share of $7.11 on revenue of $75.1 billion. J&J faces the threat of lower-priced competition emerging for some top-selling prescription drugs. And with nearly half of its sales overseas, J&J’s results have been pressured by a strengthening U.S. dollar and weakness in some emerging markets. Currency fluctuations shaved 0.6% off the company’s top line. JNJ carries a solid dividend yield (2.8%) and conservative income investors may want to consider holding it as a core position in their portfolios.

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