Johnson & Johnson tops Street 3Q forecasts, hikes forecast

FAN Editor

Higher spending across the board drove Johnson & Johnson’s third-quarter profit down 12 percent, despite a big jump in sales fueled by recent acquisitions, hot new cancer drugs and strong sales of other key medicines.

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However, the health care giant easily topped Wall Street expectations. With momentum in product sales across all three of its business segments, Johnson & Johnson boosted its financial forecast for the third time this year.

Shares edged closer to an all-time high before the opening bell Tuesday.

Sales of prescription medicines soared 15.4 percent to $9.7 billion, boosted by blood cancer drug Imbruvica, Darzalex for multiple myeloma, blood thinner Xarelto and immune disorder drug Stelara. Sales of some older drugs declined amid increased competition from other brand-name drugs or generics, particularly top seller Remicade for rheumatoid arthritis and other immune disorders.

Those declines were offset by $670 million in revenue from drugs for dangerously high blood pressure in the lungs made by Swiss biopharmaceutical company Actelion, which J&J bought in June for $30 billion — its biggest acquisition ever. That deal gave J&J a sixth disease area that’s a major focus, joining drugs for cancer, immune disorders, neurological conditions, infectious diseases and cardiovascular conditions.

Sales of consumer health products such as Tylenol and Neutrogena skin care rose 2.9 percent, to $3.4 billion, and sales of Acuvue contact lenses and other medical devices jumped 7.1 percent, to $6.6 billion.

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The New Brunswick, New Jersey, company reported overall sales of $19.7 billion, up from $17.8 billion in 2016’s third quarter. That exceeded analyst forecasts for revenue of $19.28 billion.

J&J reported net income of $3.76 billion, or $1.37 per share, down from $4.27 billion, or $1.53 per share, a year earlier. Adjusted for amortization costs and costs related to mergers and acquisitions, the company posted earnings of $1.90 per share, topping analysts’ forecasts for $1.80 per share.

Johnson & Johnson now expects full-year earnings in the range of $7.25 to $7.30 per share, on revenue in the range of $76.1 billion to $76.5 billion. In August, it forecast full-year earnings of $7.12 to $7.22 per share and revenue of $75.8 billion to $76.1 billion.

Wall Street has been projecting full-year earnings of $7.18 per share, according to a poll by FactSet.


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Elements of this story were generated by Automated Insights using data from Zacks Investment Research.

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