Income · Stocks to Consider and Updates

Johnson & Johnson Beats Street Views; Guidance Disappoints

Health care behemoth Johnson & Johnson (NYSE: JNJ – $128.58) reported net income of $3.04 billion in the fourth quarter and, excluding charges, earnings on a per share basis was $1.97, ahead of the $1.95 estimate and 13.2% above last year’s fourth period. Sales rose 1% to $20.4 billion, also ahead Street views of $20.2 billion, which was negatively affected by currency fluctuations by 2.3%. Consumer product sales increased to $3.536 billion for the quarter versus $3.54 billion a year ago. The consumer business was helped by positive sales of Tylenol and Motrin analgesics and digestive health products; Neutrogena and OGX beauty products; and Listerine oral care. Worldwide pharmaceutical sales advanced to $10.19 billion from last year’s $9.68 billion. An increase in the company’s Zytiga and Stelara drugs were offset by declines in its Remicide and Xarelto offerings. J&J’s medical device segment had sales of $6.668 billion compared to $6.974 billion, following the sale of its Lifescan business this year. Medical devices were driven by electrophysiology products in the Interventional Solutions business; ACUVUE contact lenses and surgical products in the Vision business; wound closure products in the General Surgery business; along with endocutters and biosurgicals in the Advanced Surgery business.

       For 2019, the Brunswick, New Jersey company expects sales of $80.4 billion to $81.2 billion and adjusted earnings of $8.50 to $8.65, compared to last year’s $8.16 per share, but on the low-end of analysts’ views. The company is experiencing some headwinds in its medical device business and is shoring up funds for its talc litigation defense. Nonetheless, income investors may want to take another look at this high-quality stock. The company is continuing to repurchase shares of up to $5 billion and the growing and well-covered $3.60 annual dividend yields 2.8% at current levels.

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