Johnson & Johnson 4Q18 earnings and revenue beat but FY19 forecast disappoints

Johnson & Johnson (JNJ) on Tuesday (22 January) reported better-than-expected 4Q18 earnings and revenue, buoyed by prescription drug sales. Overall, 4Q18 revenue rose to $20.4bn from $20.2bn in 4Q17, topping the Refinitiv consensus estimate of $20.2bn. Meanwhile, net profit came in at $3.0bn, or $1.12/share, vs a loss of $10.7bn, or $3.99/share, a year earlier, when it recorded a $13.6bn charge related to US tax law changes. Excluding items, JNJ earned $1.97/share, beating Refinitiv consensus analysts’ estimate of $1.95/share.

In terms of operating segments, the Consumer segment improved slightly, recording a 0.1% YoY decline to $3.5bn, while the Medical Devices businesses continued to struggle with sales declining by 4.4% YoY to $6.67bn (below consensus forecasts of $6.68bn). However, Pharmaceutical sales rose 5.3% YoY to $10.19bn, surpassing the $9.99bn consensus forecasts had expected and led by JNJ’s Crohn’s disease treatment, Stelara.

Looking ahead, the firm’s 2019 sales forecast fell short of expectations with JNJ saying it expects FY19 sales in the range of $80.4bn-$81.2bn, compared with a consensus analyst estimate of $82.69bn. JNJ forecast FY19 profit in the range of $8.50/share to $8.65/ share, compared with analysts’ expectation of $8.60/share.

JNJ’s share price has been under pressure since Reuters reported in December that the company knew for decades that its talc baby powder contained asbestos. However, the firm has repeatedly denied wrongdoing saying that it stands behind its baby powder. Since the publication of that report the share price is down c. 9.5% (to Monday’s close).

JNJ closed 1.7% lower on Tuesday after its FY19 sales (and earnings) forecast fell short of analyst expectations.

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