Johnson & Johnson (JNJ, Financial) reported its second-quarter earnings results on July 14. Earnings beat analysts’ estimates for the quarter. Reported revenue was $17.79 billion, topping analysts’ average revenue estimate of $17.75 billion. Adjusted net earnings were $4.8 billion resulting in earnings per share of $1.71. Analysts’ estimates had called for earnings per share of $1.67.
The firm operates within three main business segments: Consumer, Pharmaceutical and Medical Devices. While sales topped analysts’ estimates all three business segments reported lower revenue growth compared to the second quarter of 2014. For the quarter sales were down across the board due primarily to effects from the strengthened dollar. In management’s earnings comments, it noted a negative 7.9% impact on revenue from currency exchange effects.
Pharmaceutical sales continued to dominate the majority of sales revenue for Johnson & Johnson at 45%. In management’s earnings comments it specifically noted strong drug sales in the U.S. and internationally from Invokana/Invokamet, Imbruvica, Xarelto, Zytiga, Xeplion, Concerta, Stelara and Simponi. Sales revenue in the U.S. from these drugs specifically is expected to show continued growth in the near term as effects from the strengthened dollar continue. In the second quarter 57% of the segment’s revenue was from U.S. sales.
In the day following the company’s earnings announcement the stock was down 0.49% to close at $99.78. It appears to be trading slightly below its discounted cash flow value of $102.90. Currently analysts have an average target price for the stock of $109.59 with a high of $123 and a low of $100.
In recent trading both the Yacktman Focused Fund (Trades, Portfolio) and Yacktman Fund (Trades, Portfolio) sold shares of Johnson & Johnson while Manning & Napier Advisors, Inc. increased its holdings. On June 30 the Yacktman Focused Fund (Trades, Portfolio) sold 500,000 shares and the Yacktman Fund (Trades, Portfolio) sold 400,000. Manning & Napier Advisors, Inc. increased its holdings on June 30 adding 490,018 shares.
