Johnson & Johnson shares fell Tuesday after the corporate reported adjusted earnings and revenue that topped Wall Street’s expectations, but lowered its sales guidance for its pharmaceutical business.
J&J, whose financial results are considered a bellwether for a lot of health corporations, said its sales throughout the quarter grew 5.6% over the identical quarter last yr.
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The patron staples giant reported a net lack of $68 million, or 3 cents per share, related to its talc baby powder liabilities and costs tied to the upcoming spinoff of its consumer health business. That compares with a net income of $5.2 billion, or $1.93 per share, for a similar period a yr ago. Excluding certain items, adjusted earnings per share were $2.68 for the period.
Here’s how J&J results compared with Wall Street expectations, based on a survey of analysts by Refinitiv:
- Earnings per share: $2.68 adjusted, vs. $2.50 expected
- Revenue: $24.75 billion, vs. $23.67 billion expected
J&J barely lowered its pharmaceutical sales goal for 2025 to $57 million, down from the $60 million the corporate forecast two years ago. J&J executives on an earnings call cited currency dynamics, noting that foreign exchange headwinds had a negative impact of roughly $3 billion within the pharmaceutical business in 2022.
The stock closed nearly 3% lower Tuesday. Shares are down greater than 9% for the yr through the close, putting the corporate’s market value at roughly $420 billion.
J&J is now forecasting 2023 sales of $97.9 billion to $98.9 billion, about $1 billion higher than the guidance provided in January. The corporate raised its full-year adjusted earnings outlook to $10.60 to $10.70 per share, from a previous forecast of $10.45 to $10.65.
CFO Joseph Wolk told CNBC on Tuesday that J&J raised its guidance on account of strong growth across all three business sectors — consumer health, pharmaceuticals and medical devices.
“For those who take into consideration how we began the yr and guidance in January, we were responsibly cautious,” he said on “Squawk Box.” “First-quarter growth was much stronger than even fourth-quarter growth for all three business units, and our positions sort of change to responsibly optimistic at this point. We feel superb about 2023.”
He added that data being produced on J&J’s drug for the cancer multiple myeloma and procedural data in its medical devices unit make the corporate “feel very, superb about what lies beyond 2023.”
J&J reported $13.4 billion in pharmaceutical sales, which grew greater than 4% over the identical quarter last yr. The corporate said that increase was driven by sales of Darzalex, a biologic for the treatment of multiple myeloma, and the blockbuster drug Stelara, which is used to treat plenty of immune-mediated inflammatory diseases.
J&J will lose patent protection on Stelara later this yr. During a conference call, Wolk said the corporate is “committed to growing through the loss.”
Sales for the corporate’s medical devices business rose to almost $7.5 billion, up 7.3% from the primary quarter of 2022. J&J said its acquisition of Abiomed, a cardiovascular medical technology company, in December last yr fueled that rise.
J&J’s consumer health business, which it’s spinning off right into a separate publicly traded company this yr, reported about $3.8 billion in sales. That unit grew 7.4% over the identical period last yr, primarily driven by over-the-counter products resembling Tylenol and skin health products under brands resembling Neutrogena and Aveeno.
Wolk told CNBC the corporate is making “great progress” on the separation of its consumer health business. But J&J hasn’t been clear about when precisely the split will occur.
J&J also announced its board has approved a 5.3% quarterly dividend increase, to $1.19 per share, on account of the corporate’s strong 2022 performance.
The Latest Brunswick, Latest Jersey-based company entered this earnings season with its shares on the rise after it offered more clarity on the long-running legal fight over its talc-based baby powder products. Earlier this month, J&J proposed to pay nearly $9 billion over the following 25 years to settle hundreds of allegations that its baby powder and other talc products caused cancer.
J&J’s subsidiary LTL Management also refiled for Chapter 11 bankruptcy protection earlier this month after its first attempt was thwarted.
Wolk during a conference call said the corporate will bring the proposed reorganization plan to bankruptcy court in mid-May. He expressed confidence that claimants will vote to approve the plan, noting that 60,000 claimants have already committed to accomplish that.
The corporate expects to win over a small but “vocal minority” of plaintiff attorneys who oppose the plan, added Andrew White, J&J’s assistant general counsel.
Wolk continued to disclaim the talc allegations, calling it “unlucky” that J&J has to “put dollars towards quite frankly baseless scientific claims.”
Lawsuits allege the corporate’s talc products were contaminated with the carcinogen asbestos, which caused ovarian cancer in hundreds of people. Some suits link several deaths to J&J’s talc products.