Income · Stocks to Consider and Updates

Johnson & Johnson Beats Estimates; Lowers Guidance

The pharmaceuticals business of income choice Johnson & Johnson (NYSE: JNJ – $130.13) helped drive sales growth for the latest quarter, but the health-products giant’s U.S. consumer business continued to struggle. Total sales for the second period rose 11% from a year ago to $20.83 billion above analysts’ estimates of $20.39 billion. Sales in the pharmaceuticals division rose 20%, the largest increase among J&J segments. J&J’s consumer segment sales in the U.S. fell 0.7%, but world-wide sales rose 0.7% to $3.5 billion. Worldwide medical devices sales of $7.0 billion for the second quarter represented an increase of 3.7% versus the prior year. Excluding special items, the company reported a profit of $2.10 per share, beating analysts’ average estimates of $2.07 and compared to last year’s $1.83 – nearly a 15% gain.

       Shares of JNJ are trading higher by over 4% despite management guiding lower than earlier estimates. J&J now expects sales to be between $80.5 billion and $81.3 billion for the year, compared with its prior estimates of between $81 billion and $81.8 billion and Street estimates of $81.7 billion. The company also narrowed its annual profit target to between $8.07 a share and $8.17 compared with its previous estimates of between $8.00 and $8.20. These shares should interest most income investors. J&J has not performed well of late, which means that its total return potential out to 2021-2023 looks attractive for such a blue-chip stock. Plus, the $3.60 annual dividend yields nearly 3% at current levels and continued growth in pharmaceutical sales should drive shares higher.

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