Income · Stocks to Consider and Updates

Johnson & Johnson Posts Mixed Results; Ups 2017 Guidance

  Johnson & Johnson (NYSE: JNJ – $121.58), the world’s largest maker of health care products, reported adjusted net earnings of $1.83 per share, compared to the prior year’s figure of $1.73 and six cents ahead of analysts’ views. Revenues came in below expectations, however, advancing only 1.6% over 2016’s March period, $200 million short of estimates. Operational sales rose 2.0%, but were knocked back 0.4% due to currency translations. The Pharmaceutical segment, which accounted for more than 46% of first-quarter sales, turned in a mixed performance with worldwide operational sales rising 2.2% (Domestic sales decreased 0.4%, and foreign sales were up 6.1%).

       The company’s Medical Devices business appeared to have had a good quarter as domestic sales decreased 0.2%, while international sales rose 3.7%. Positive results were driven by strong demand for electrophysiology products in the Cardiovascular sector; ACUVUE contact lenses in the Vision Care subsidiaries; and endocutters in the Advance Surgery business. Declines in the Diabetes Care unit, however, offset some of these gains. The company’s Consumer business, which includes a few of the most iconic brands in the world, once again showed signs of struggling. On an operational basis, domestic and international sales fell 2.3% and 1.9%, respectively. Less-than-expected demand for products related to oral care, baby care  and wound care, were the main reason for the subpar showing.

Management also provided new guidance for the remainder of the year – to include its yet to be finalized acquisition of biopharma Actelion – for sales of $75.4 billion to $76.1 billion and adjusted share earnings of $7.00 to $7.15. The market was obviously not enthused by JNJ’s earnings release, as the stock has sold off by about 3.3% in today’s trading. Some shareholders were undoubtedly taking profits, as the equity had been on a good run relative to the market of late. JNJ continues to remain among the bluest of the blue-chip stocks based on its impressive balance sheet and numerous other financial metrics. The shares, yielding 2.6%, can remain a core conservative income holding.

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