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Johnson & Johnson : 2Q profit jumps 42% despite lower sales

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07/16/2019 | 07:01am EDT

Johnson & Johnson posted slightly lower sales across much of its business in the second quarter, but a big one-time gain and lower spending on marketing and administration boosted its profit a whopping 42 percent. That blew past Wall Street expectations.

The maker of baby shampoo and cancer and immune disorder drugs on Tuesday raised its full-year sales forecast, despite sharply lower sales from its medical device business, as well as lower U.S. prescription drug sales and consumer health sales overseas. The bright spot was foreign medicine sales, which jumped 6.5 % to $4.75 billion. That helped lift total revenue to $20.56 billion, also beating expectations.

Amid the ongoing furor over soaring prescription drug prices, J&J executives noted on a conference call with analysts that revenue growth was due to selling higher volumes of its prescription medicines, not price hikes, as net prices in the U.S. — after deducting discounts and rebates given to insurers and other middlemen — declined 6 % since a year ago.

Drug revenue also was hurt by unfavorable currency exchange rates, UBS analyst Carter Gould wrote to investors.

The world's biggest maker of health care products reported net income of $5.61 billion, or $2.08 per share, helped by $1.68 billion in one-time income, primarily from the sale of its Advanced Sterilization Products business. A year ago, J&J reported net income of $3.954 billion, or $1.45 per share.

Earnings, adjusted for one-time gains and costs, came to $2.58 per share, 16 cents above analyst projections.

"This was a strong quarter," Edward Jones analyst Ashtyn Evans wrote to investors. "Sales in every major segment came in higher than analysts' expectations."

Global prescription medicine sales increased 1.7 % to $10.53 billion, led by big increases in sales of cancer drugs Imbruvica and Velcade and $1.6 billion in sales for immune disorder drug Stelara, one of 10 J&J drugs with annual sales topping $1 billion. Former top seller Remicade, an older immune disorder blockbuster hurt by increasing competition, saw revenue drop 16 % to $1.11 billion.

Sales of consumer health products including Tylenol and the Neutrogena and Aveeno skin care lines edged up 1.2 % to $3.54 billion.

But sales of J&J's medical devices and diagnostic equipment, which has been going through restructuring for three years, fell 6.5 % to $6.49 billion.

"We do think that the trough is behind us" in the devices business, Chief Financial Officer Joseph Wolk said.

The New Brunswick, New Jersey, company boosted its full-year sales forecast to a range of $80.8 billion to $81.6 billion, up from its April forecast of $80.6 billion to $81.2 billion.

J&J reaffirmed its April forecast for full-year earnings in the range of $8.53 to $8.63 per share. Industry analysts have projected per-share annual earnings of $8.61.

J&J shares fell 1.2 % to $133.10.

Follow Linda A. Johnson at https://twitter.com/LindaJ_onPharma

Automated Insights, source Associated Press News

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Financials (USD)
Sales 2019 81 594 M
EBIT 2019 25 389 M
Net income 2019 18 319 M
Debt 2019 6 116 M
Yield 2019 2,86%
P/E ratio 2019 19,6x
P/E ratio 2020 17,3x
EV / Sales2019 4,32x
EV / Sales2020 4,06x
Capitalization 347 B
Duration : Period :
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Technical analysis trends JOHNSON & JOHNSON
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 20
Average target price 149,05  $
Last Close Price 131,36  $
Spread / Highest target 28,7%
Spread / Average Target 13,5%
Spread / Lowest Target -5,60%
EPS Revisions
Alex Gorsky Chairman & Chief Executive Officer
Joseph J. Wolk Chief Financial Officer & Executive Vice President
Charles O. Prince Independent Director
William David Perez Independent Director
Anne M. Mulcahy Lead Independent Director
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