Income · Stocks to Consider and Updates

Johnson & Johnson Reports Strong Results

Johnson & Johnson (NYSE: JNJ – $139.74), the world’s largest maker of health care products, reported third-quarter adjusted earnings of $1.90, compared with the prior year’s $1.68 and ten cents better than analysts’ estimates. Total revenue rose a solid 3.8%. The star performer was the Pharmaceutical sector, which now accounts for almost 50% of total sales, as revenues rose a healthy 6.7%. With Actelion acquisition figures being included for the first time, the number climbs to 14.6%. New products contributed to the strong showing, specifically, Darzalex, used for the treatment of patients with multiple myeloma and Imbruvica, an oral once-daily therapy approved for fighting certain B-cell malignancies, a type of blood or lymph node cancer. Responsible for about a third of total revenues, Medical Device segment sales rose 7.1% in the period. Deducting the part attributable to the Abbott Medical Optics acquisition, the figure declines to 1.9%. Improvement in the Cardiovascular business, Acuvue contact lenses in the Vision care unit and wound closure products in the General Surgery division, were partly offset by a sub par showing in the Diabetes Care business. The Consumer segment (about 17% of total sales), continued to experience relatively weak demand. As an owner of some of the world’s most iconic brands, including Listerine, Tylenol and Neutrogena, this operation has struggled mostly as a result of lower demand for baby care products. Indeed, domestic sales fell 0.5% in the quarter, while international sales rose 3.0%.

Management raised sales and earnings guidance for the full-year 2017. The top line is expected to come in between $76.1 billion-$76.5 billion. This is $400 million higher than the company’s last forecast. And the adjusted share-net estimate was hiked to $7.25-$7.30 from $7.12-$7.22 per share.  Conservative income investors may want to hold onto this blue chip as a core holding. Besides having one of the best balance sheets of any publicly traded company, shares of JNJ, at new all-time high, have a generous 2.5% yield and well-defined earnings. Additionally, the shift toward the Pharmaceutical sector is a major positive, due to its promising pipeline of new drugs.

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