Income · Stocks to Consider and Updates

Johnson & Johnson Beats Expectations; Raises Outlook

Third-quarter sales at Johnson & Johnson (NYSE: JNJ – $136.20) rose 3.6% from a year ago to $20.35 billion. Analysts had expected $20.05 billion. World-wide sales in the Pharmaceutical division rose 6.7% to $10.3 billion aided by sales of cancer drugs Zytiga and Imbruvica as well as Tremfya for plaque psoriasis, among other medications. The troubled Consumer Segment turned around for the quarter. Sales rose 1.8% year-on-year in the third quarter to $3.4 billion on strength in analgesics, Zyrtec allergy medication, Imodium for digestion, beauty products and domestic sales of baby care products. At J&J’s Medical Device Segment, worldwide sales increased 2.9% to $6.6 billion, excluding the net impact of acquisitions and divestitures. Growth here was driven by increased demand for electrophysiology products, ACUVUE contact lenses, and endocutters and biosurgicals in the Advance Surgery business offset by softness in the Diabetes Care business. Total corporate profits for the period was $3.93 billion, compared with $3.76 billion for the same period last year. On an adjusted basis, J&J earned $2.05 a share, slightly above analysts’ estimates of $2.03 and compared to $1.90 a year ago.

       The company issued sales guidance for the full-year 2018 in a range of $81.0 to $81.4 billion. This reflects an increase in expected operational growth to a range of 5.5% to 6.0%, partially offset by the estimated lower favorable impact of currency. Additionally, management increased its adjusted earnings guidance for full-year 2018 to a range of $8.13 to $8.18 per share, bracketing the $8.15 Street consensus. The upgraded guidance reflects an increase in expected operational earnings per share growth to a range of 9.3% to 10.0%.

       Conservative income investors may want to take a look at this blue chip. The company has a stellar balance sheet and offers a generous 2.7% yield on a growing dividend payout of $3.60 per share. J&J also has above-average total return prospects through 2021-2023 and, on a risk-adjusted basis given its well-defined prospects, is even more attractive.

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