Johnson & Johnson Rises on Strong 3rd-Quarter Results

Company posts earnings and revenue beat, raises guidance

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Oct 16, 2018
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Health care conglomerate Johnson & Johnson (JNJ, Financial) reported strong third-quarter earnings before the opening bell on Tuesday, sending shares higher.

The New Brunswick, New Jersey-based company, which also produces consumer goods, posted adjusted earnings of $2.05 per share, topping Refinitiv’s estimates of $2.03. Revenue grew 3.6% from the prior-year quarter to $20.35 billion, beating expectations of $20.05 billion.

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Johnson & Johnson’s pharmaceuticals segment saw 6.7% revenue growth to $10.3 billion. While worldwide sales of cancer drug Darzalex, which reached $498 million, missed expectations of $538.7 million, sales of Stelara, which treats plaque psoriasis, came in at $1.31 billion, topping the Street’s forecast of $911 million.

The medical devices segment, which consists of products for surgery as well as orthopedic and cardiovascular devices, posted a small decline in sales to $6.6 billion, just shy of the $6.64 billion analysts were expecting.

Revenue in the consumer business rose 1.8% to $3.42 billion, beating estimates of $3.34 billion. The segment benefited from a 20% increase in baby care sales to $120 million as a result of the company revamping and relaunching its product portfolio in August.

In a statement, Chairman and CEO Alex Gorsky lauded the company’s performance, saying it “reflects continued above-market growth in our Pharmaceutical business, accelerating sales momentum in our Consumer business and consistent progress in our Medical Devices business.”

“I’m confident that with our collaborative and inspired J&J colleagues around the world, unique broad-based business model and strategic investments in innovation, we are well positioned for success today and into the future,” he added.

During the quarter, the conglomerate also completed its acquisition of Zarbee’s Inc., which manufactures natural health care products, and inked a deal with Arrowhead Pharmaceuticals Inc. (ARWR, Financial) to develop and produce its gene-silencing Hepatitis B treatment.

As a result of its strong performance, Johnson & Johnson now expects between $81 billion and $81.4 billion in revenue for the full year. It also increased its earnings guidance to between $8.13 and $8.18 per share.

With a market cap of $366.38 billion, shares of Johnson & Johnson were up 2.25% at $136.74 on Tuesday morning. GuruFocus estimates the stock has fallen 1% year to date.

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Disclosure: No positions.

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