Income · Stocks to Consider and Updates

Johnson & Johnson Beats Sales and Earnings Estimates; Guides Higher

Health care giant Johnson & Johnson (NYSE: JNJ – $129.74) reported adjusted net profit for the first quarter of $2.06 per share, up from $1.83 in the prior year period, and four cents higher than the Street estimate. Sales jumped 13% to $20.01 billion, up from $17.77 billion last year and higher than the $19.50 billion consensus estimate. Sales in J&J’s Janssen pharmaceutical business, its largest segment by revenue, jumped 19% to $9.84 billion, while sales in its consumer and medical device segments rose 5.3% and 7.5%, respectively. The company’s blockbuster rheumatoid arthritis drug Remicade, however, has come under pressure from cheaper copies of the treatment, pushing the company to focus on newer treatments such as cancer drugs. Quarterly sales of its cancer treatments surged 45% to $2.31 billion, accounting for nearly a quarter of its pharmaceutical unit’s revenue, which offset Remicade’s first-quarter sales decline of 16.9%.  International sales were particularly strong during the quarter for its consumer and medical device segments.

       For 2018, the company now expects sales to range from $81 billion to $81.8 billion (from its previous target of $80.6 billion to $81.4 billion) on the heels of a continued strong forecast for its cancer drug portfolio. The company guided adjusted earnings of $8.00 to $8.20 per share. The Street estimates for earnings per share and revenue are $8.10 and $81.18 billion, respectively. Shares of Johnson & Johnson should continue to interest conservative income investors. Despite good news on the operational front, JNJ is trading well off its high of $148.32 and is valued at about 16 times full-year earning’s projections. In addition, this high-quality equity has attractive total return potential out to 2021- 2023, especially when viewed on a risk adjusted basis, thanks to its generous $3.36 dividend, yielding 2.6%.


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