By George Stahl
Health-care giant Johnson & Johnson on Tuesday is scheduled
to report its financial results for the fourth quarter before the
market opens. Here are a few things to watch.
-EARNINGS FORECAST: Earnings of $1.26 a share is the median of
estimates compiled by Thomson Reuters, up from $1.24 a share in the
same quarter last year.
-REVENUE FORECAST: Wall Street analysts expect revenue of $18.55
billion, up from the $18.36 billion reported one year earlier.
WHAT TO WATCH
--HEPATITIS C SALES: Johnson & Johnson's sales have been
propelled by newer drugs such as Xarelto, Zytiga, Stelara and
Invokana as J&J strives to revive its consumer and
medical-devices businesses. J&J's hepatitis C drug, Olysio,
also had been contributing to the growth but was expected to drop
off as the result of growing competition. Wells Fargo says Olysio's
fourth-quarter U.S. sales could total more than $250 million, down
from $671 million in the third quarter
--STRONGER DOLLAR: The dollar's recent strength against the euro
and yen is likely to bite into Johnson & Johnson's sales. The
company gets about 55% of its revenue from outside the U.S. Leerink
Swann recently cut J&J's 2015 sales estimate by $1.2 billion to
$75.1 billion and lowered its per-share earnings forecast by a dime
to $6.20.
--CASH PILE: Drug companies have built up their balance sheets,
leading some to think that 2015 could include a lot of health-care
deals. Overall, cash reserves at pharmaceuticals jumped 11%
year-over-year in the third quarter to $217 billion, according to
FactSet. Johnson & Johnson was the biggest stockpiler that
quarter, adding $7.8 billion to its cash on hand. Wells Fargo says,
"With nearly $18 [billion] of net cash on its balance sheet, we
believe that JNJ has significant resources to acquire assets that
can enhance organic growth over time and buyback shares as
appropriate."
--Write to George Stahl at george.stahl@wsj.com
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