Johnson & Johnson Raises Guidance -- 2nd Update
July 19 2016 - 12:25PM
Dow Jones News
By Anne Steele and Jonathan D. Rockoff
Johnson & Johnson on Tuesday raised its guidance for the
year again as the health-care giant topped expectations in the
latest quarter, helped by growth in its pharmaceutical
business.
The New Brunswick, N.J., company now expects earnings for the
year of $6.63 to $6.73 a share, up from previous guidance for $6.53
to $6.68 a share. It also raised its revenue forecast to a range
from $71.5 billion to $72.2 billion, up from $71.2 billion to $71.9
billion. In April the company beat earnings expectations for the
first quarter and raised its revenue and earnings guidance for the
year.
Chief Executive Alex Gorsky expressed optimism about J&J's
outlook, saying longstanding efforts to reshape the company's
struggling medical-device and consumer-health businesses were
bearing fruit. He said J&J was positioned to surpass the
world-wide health-care market's current 3% to 5% annual growth
rate.
But J&J faces the threat of lower-priced competition
emerging for some top-selling prescription drugs. And with about
half of its sales overseas, J&J's results have been pressured
lately by a strengthening U.S. dollar and weakness in some emerging
markets.
Chief Financial Officer Dominic Caurso said during a conference
call that J&J, which gets about 3% of its sales from the United
Kingdom, is watching events in the country following its recent
vote to leave the European Union.
J&J's pharmaceutical business, the company's largest,
continued to propel the company. Prescription-drug sales grew 8.9%
to $8.65 billion.
Executives attributed the growth to sales from new products,
including blood-cancer drug Imbruvica, blood thinner Xarelto,
multiple myeloma drug Darzalex, Type 2 diabetes treatments Invokana
and Invokamet, and prostate-cancer drug Zytiga.
Mr. Caruso said J&J doesn't expect biosimilar competition
this year for top-selling drugs Remicade and Procrit.
Other J&J businesses, however, didn't perform as well. In
the second quarter, sales of J&J consumer health products
slipped 1.8% to $3.42 billion, largely due to Venezuela's
devaluation of its currency.
To bolster the consumer business, J&J has been doing deals,
most recently a $3.3 billion purchase of privately held
hair-product maker Vogue International LLC.
Meanwhile, J&J's medical device sales edged up just 0.8% to
$6.41 billion.
The medical-device business used to be J&J's largest, but it
has stumbled amid pricing pressures, increased competition and
market changes. In response, J&J has exited certain areas,
rejiggered how it sells devices and focused on high-growth
categories like robotics and staplers. In January, J&J
announced plans to cut about 3,000 jobs in its medical-devices
division, or about 2.5% of the company's total workforce.
In all for the quarter ended June, earnings fell to $3.99
billion, or $1.43 a share, from $4.52 billion, or $1.61 a share, in
the same period last year. Excluding certain items, adjusted
earnings rose to $1.74 a share. Revenue ticked up 3.9% to $18.5
billion. Unfavorable currency rates shaved 1.4% off the latest
quarter's total.
Analysts had projected earnings of $1.68 a share on $17.97
billion in revenue, according to Thomson Reuters.
Shares, up 20% this year, rose 1.3% on the New York Stock
Exchange in trading Tuesday morning.
Write to Anne Steele at Anne.Steele@wsj.com and Jonathan D.
Rockoff at Jonathan.Rockoff@wsj.com
(END) Dow Jones Newswires
July 19, 2016 12:10 ET (16:10 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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