Johnson & Johnson (NYSE:JNJ) delivered Wall Street’s favorite earnings treat — a beat and raise quarter — setting JNJ stock up to build handsomely on what has already been an enviable year of gains.
The diversified healthcare company’s pharmaceutical segment was the standout driving top-line growth. Thanks to JNJ’s Imbruvica cancer drug, Xarelto blood thinner and Remade — an arthritis drug and J&J’s biggest seller — JNJ pharma sales rose almost 9% to $8.7 billion. Remicade sales rose 6.7% to $1.78 billion alone.
CEO Alex Gorsky said in a statement:
“We saw notable strength in our Pharmaceuticals business due to the continued success of new products, and also achieved significant clinical milestones, advancing our robust pipeline.”
Results from other business segments were mixed. Johnson & Johnson consumer health products sales fell almost 2% to $3.4 billion as Venezuela devalued its currency. However, sales of medical devices increased nearly 1% to $6.4 billion, which accounted for more than two-thirds of the top line.
Taken together, JNJ’s sales rose 3.9% to $18.5 billion, easily topping analysts’ average estimate of $17.98 billion, according to a survey by Thomson Reuters.
JNJ Stock Easy to Love on Guidance Hike
The better-than-expected top-line results helped JNJ exceed the Street’s average earnings forecast by a wide margin. On a net basis, profit fell to $4 billion, or $1.43 a share of JNJ stock, from $4.52 billion, or $1.61 a share, in last year’s quarter. But on an adjusted basis — which is what analysts and investors care about — earnings came to $1.74, while the Street was looking for earnings of $1.68 a share.
Of course, the most important news for the future trajectory of JNJ stock is guidance, which the company lifted significantly. For the full fiscal year, Johnson & Johnson now sees adjusted earnings coming in at anywhere $6.63 to $6.73 a share. Analysts’ average estimate stands at $6.61, so we can expect that to come up.
Revenue is now targeted at $71.5 billion to $72.2 billion, versus the current Street estimate of $71.72 billion.
With JNJ stock up 20% for the year-to-date ahead of the encouraging earnings report, it’s natural to expect even more outperformance in the months ahead.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
