Strategy

J&J Sales Increase 1.7% But Miss Estimates

Earnings jumped 19% to $3.81 billion in the fourth quarter, but sales were hit by slowing demand for medical devices.
Matthew HellerJanuary 24, 2017
J&J Sales Increase 1.7% But Miss Estimates

Johnson & Johnson on Tuesday reported a smaller-than-expected rise in fourth-quarter sales and forecast 2017 sales and profit below Wall Street estimates.

For the final quarter of 2016, J&J’s earnings jumped 19% to $3.81 billion with adjusted earnings of $1.58 per share, topping average analyst expectations by two cents. Revenue grew 1.7% to $18.11 billion from $17.81 billion, missing the FactSet consensus of $18.26 billion.

According to CNBC, sales were hurt by slowing demand for J&J’s medical devices and a stronger dollar.

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Full-year sales rose 2.6% to $71.9 billion, with domestic sales up 6.0% and international sales down 0.9%. Excluding non-recurring items, worldwide sales rose 7.4%.

“We are pleased to report that we accelerated our adjusted growth for 2016 over the prior year, and delivered a strong total shareholder return of greater than 15 percent,” CEO Alex Gorsky said in a news release.

“The strong adjusted sales and EPS growth was driven by the impressive performance of our pharmaceutical business and continued momentum in our medical device business and share gains while improving profitability in our consumer business,” he added.

The consumer segment was boosted in the fourth quarter by a surge in beauty product sales, growing 3.4% percent to $3.43 billion in revenue. Pharmaceutical revenue climbed 2.1% to $8.23 billion even though sales of the biologic immune disorder drug Remicade dropped 3.3% to $1.62 billion.

For 2017, J&J is now forecasting adjusted earnings of $6.93 to $7.08 per share on revenue of $74.1 billion to $74.8 billion, below the average analyst estimate for a profit of $7.11 per share on revenue of $75.10 billion.

“We think the outlook reflects a degree of conservatism rather than a reflection of caution on fundamentals,” Barclays analyst Geoff Meacham said in a research note.

Gorsky said the company expects to “continue driving sustainable, long-term growth through the new products, science and innovation that our talented colleagues and partners of Johnson & Johnson are advancing to positively impact human health.”