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J&J (JNJ) Q4 Earnings Top, Pharma Sales Continue to Improve
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Johnson & Johnson (JNJ - Free Report) reported mixed fourth-quarter 2017 results, beating the Zacks Consensus Estimate for earnings while slightly missing the same for sales. The drug and consumer products giant issued a decent outlook for 2018. Shares were up around 1% in pre-market trading.
In fact, in the past year, J&J’s shares have returned 32.6%, comparing favorably with the 25.8% increase witnessed by the industry.
Earnings Beat
J&J’s fourth-quarter 2017 earnings came in at $1.74 per share, beating the Zacks Consensus Estimate of $1.72 and increasing 10.1% from the year-ago period.
Adjusted earnings excluded amortization expense and some special items which included a charge related to the recent tax law changes. Including these items, J&J reported fourth-quarter net loss of $3.99 per share versus earnings of $1.38 per share in the year-ago period.
Sales Miss Slightly
Sales came in at $20.20 billion, slightly missing the Zacks Consensus Estimate of $20.22 billion. Nonetheless, sales increased 11.5% from the year-ago quarter, reflecting an operational increase of 9.4% and a positive currency impact of 2.1%. Organically, excluding the impact of acquisitions and divestitures, sales increased 4.2% on an operational basis, better than 3.8% seen in the third quarter and 2.4% in the first half as the Pharmaceutical segment continued the positive momentum seen in the third quarter.
Fourth-quarter sales grew 9.8% in the domestic market to $10.47 billion and 13.5% in international markets to $9.73 billion, reflecting 9% operational growth and 4.5% positive currency impact.
Sales in Details
Pharmaceutical segment sales rose 17.6% year over year to $9.7 billion, reflecting 15.5% operational growth and 2.1% positive currency impact as sales rose in both domestic and international markets. Sales in the domestic market rose 15.5% to $5.78 billion while international sales grew 20.9% to $3.91 billion.
New products like Imbruvica (cancer) and Darzalex (multiple myeloma) continued to perform well. Other growth drivers were core products like Xarelto, Stelara, Zytiga and Invega Sustenna. Please note that J&J markets Imbruvica in partnership with AbbVie, Inc. (ABBV - Free Report) .
In the quarter, J&J recorded pulmonary arterial hypertension (PAH) revenues of $610 million. The $30 billion acquisition of Swiss biotech Actelion in June last year diversified J&J’s revenues to the PAH category and added 4.2% to sales growth in 2017.
However, sales of Invokana/Invokamet declined 28% due to higher managed care discounting. Importantly, sales of the blockbuster rheumatoid arthritis drug Remicade, marketed in partnership with Merck & Co., Inc. (MRK - Free Report) , declined 9.7% in the quarter with U.S. sales declining 8.5% and international sales declining 18.7% due to biosimilar competition.
J&J’s Pharma segment achieved some clinical milestones during the quarter including approval for Tremfya (guselkumab) in the EU (November) for plaque psoriasis and Juluca (dolutegravir + rilpivirine) - the first dual treatment for HIV – in the United States. Please note that Juluca has been developed in partnership with GlaxoSmithKline (GSK - Free Report) . Juluca is under review in the EU while Tremfya was approved in the United States in July last year.
In the quarter, J&J also gained FDA approval for several line extensions - a lower dose of Xarelto, two new indications of Simponi Aria - psoriatic arthritis and ankylosing spondylitis and use in adolescents for Stelara.
Medical Devices segment sales came in at $6.97 billion, up 8.3% from the year-ago period. It included an operational increase of 6.5% and positive currency movement of 1.8%.
Domestic market sales rose 5.3% year over year to $3.31 billion. International market sales increased 11.1% (operational increase of 7.5%) year over year to $3.66 billion.
The Consumer segment recorded revenues of $3.54 billion in the reported quarter, up 3.1% year over year (operational increase of 0.4%). Foreign currency movement positively impacted sales in the segment by 2.7%. Sales in the domestic market declined 0.6% from the year-ago period to $1.38 billion.
Meanwhile, the international segment recorded an increase of 5.7% to $2.16 billion, reflecting an operational increase of 1.2% and a positive currency impact of 4.5%.
2017 Results
Full-year 2017 sales rose 6.3% to $76.5 billion, falling slightly short of the Zacks Consensus Estimate of $76.8 billion.
Adjusted earnings for 2017 were $7.30 per share, above the Zacks Consensus Estimate of $7.28 and up 8.5% year over year. Earnings were at the higher end of the guidance range of $7.25 - $7.30per share.
2018 Outlook Issued
J&J issued a decent guidance for 2018 wherein the earnings range was above the consensus estimate while sales fell slightly short of the same.
J&J expects 2018 adjusted earnings per share in the range of $8.00 - $8.20, reflecting an operational growth rate between 6.8% and 9.6%. The company’s guidance exceeds theZacks Consensus Estimate of $7.86 per share.
It expects revenues in the range of $80.6 billion to $81.4 billion, reflecting operational constant currency sales growth rate in the range of 3.5% to 4.5%. However, the sales guidance falls slightly short of the Zacks Consensus Estimate of $81.55 billion.
Our Take
The acceleration in underlying sales growth seen in the third quarter continued in the fourth quarter. Though quite a few key products in J&J’s portfolio like Remicade and Concerta faced generic competition, we believe that new products in all segments, label expansion of drugs like Imbruvica and Darzalex and contribution from Actelion led to better sales trends in the second half of 2017 compared to the first half. The 2018 profit outlook is also quite upbeat.
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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J&J (JNJ) Q4 Earnings Top, Pharma Sales Continue to Improve
Johnson & Johnson (JNJ - Free Report) reported mixed fourth-quarter 2017 results, beating the Zacks Consensus Estimate for earnings while slightly missing the same for sales. The drug and consumer products giant issued a decent outlook for 2018. Shares were up around 1% in pre-market trading.
In fact, in the past year, J&J’s shares have returned 32.6%, comparing favorably with the 25.8% increase witnessed by the industry.
Earnings Beat
J&J’s fourth-quarter 2017 earnings came in at $1.74 per share, beating the Zacks Consensus Estimate of $1.72 and increasing 10.1% from the year-ago period.
Adjusted earnings excluded amortization expense and some special items which included a charge related to the recent tax law changes. Including these items, J&J reported fourth-quarter net loss of $3.99 per share versus earnings of $1.38 per share in the year-ago period.
Sales Miss Slightly
Sales came in at $20.20 billion, slightly missing the Zacks Consensus Estimate of $20.22 billion. Nonetheless, sales increased 11.5% from the year-ago quarter, reflecting an operational increase of 9.4% and a positive currency impact of 2.1%. Organically, excluding the impact of acquisitions and divestitures, sales increased 4.2% on an operational basis, better than 3.8% seen in the third quarter and 2.4% in the first half as the Pharmaceutical segment continued the positive momentum seen in the third quarter.
Fourth-quarter sales grew 9.8% in the domestic market to $10.47 billion and 13.5% in international markets to $9.73 billion, reflecting 9% operational growth and 4.5% positive currency impact.
Sales in Details
Pharmaceutical segment sales rose 17.6% year over year to $9.7 billion, reflecting 15.5% operational growth and 2.1% positive currency impact as sales rose in both domestic and international markets. Sales in the domestic market rose 15.5% to $5.78 billion while international sales grew 20.9% to $3.91 billion.
New products like Imbruvica (cancer) and Darzalex (multiple myeloma) continued to perform well. Other growth drivers were core products like Xarelto, Stelara, Zytiga and Invega Sustenna. Please note that J&J markets Imbruvica in partnership with AbbVie, Inc. (ABBV - Free Report) .
In the quarter, J&J recorded pulmonary arterial hypertension (PAH) revenues of $610 million. The $30 billion acquisition of Swiss biotech Actelion in June last year diversified J&J’s revenues to the PAH category and added 4.2% to sales growth in 2017.
However, sales of Invokana/Invokamet declined 28% due to higher managed care discounting. Importantly, sales of the blockbuster rheumatoid arthritis drug Remicade, marketed in partnership with Merck & Co., Inc. (MRK - Free Report) , declined 9.7% in the quarter with U.S. sales declining 8.5% and international sales declining 18.7% due to biosimilar competition.
J&J’s Pharma segment achieved some clinical milestones during the quarter including approval for Tremfya (guselkumab) in the EU (November) for plaque psoriasis and Juluca (dolutegravir + rilpivirine) - the first dual treatment for HIV – in the United States. Please note that Juluca has been developed in partnership with GlaxoSmithKline (GSK - Free Report) . Juluca is under review in the EU while Tremfya was approved in the United States in July last year.
In the quarter, J&J also gained FDA approval for several line extensions - a lower dose of Xarelto, two new indications of Simponi Aria - psoriatic arthritis and ankylosing spondylitis and use in adolescents for Stelara.
Medical Devices segment sales came in at $6.97 billion, up 8.3% from the year-ago period. It included an operational increase of 6.5% and positive currency movement of 1.8%.
Domestic market sales rose 5.3% year over year to $3.31 billion. International market sales increased 11.1% (operational increase of 7.5%) year over year to $3.66 billion.
The Consumer segment recorded revenues of $3.54 billion in the reported quarter, up 3.1% year over year (operational increase of 0.4%). Foreign currency movement positively impacted sales in the segment by 2.7%. Sales in the domestic market declined 0.6% from the year-ago period to $1.38 billion.
Meanwhile, the international segment recorded an increase of 5.7% to $2.16 billion, reflecting an operational increase of 1.2% and a positive currency impact of 4.5%.
2017 Results
Full-year 2017 sales rose 6.3% to $76.5 billion, falling slightly short of the Zacks Consensus Estimate of $76.8 billion.
Adjusted earnings for 2017 were $7.30 per share, above the Zacks Consensus Estimate of $7.28 and up 8.5% year over year. Earnings were at the higher end of the guidance range of $7.25 - $7.30per share.
2018 Outlook Issued
J&J issued a decent guidance for 2018 wherein the earnings range was above the consensus estimate while sales fell slightly short of the same.
J&J expects 2018 adjusted earnings per share in the range of $8.00 - $8.20, reflecting an operational growth rate between 6.8% and 9.6%. The company’s guidance exceeds theZacks Consensus Estimate of $7.86 per share.
It expects revenues in the range of $80.6 billion to $81.4 billion, reflecting operational constant currency sales growth rate in the range of 3.5% to 4.5%. However, the sales guidance falls slightly short of the Zacks Consensus Estimate of $81.55 billion.
Our Take
The acceleration in underlying sales growth seen in the third quarter continued in the fourth quarter. Though quite a few key products in J&J’s portfolio like Remicade and Concerta faced generic competition, we believe that new products in all segments, label expansion of drugs like Imbruvica and Darzalex and contribution from Actelion led to better sales trends in the second half of 2017 compared to the first half. The 2018 profit outlook is also quite upbeat.
J&J carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Johnson & Johnson Price, Consensus and EPS Surprise
Johnson & Johnson Price, Consensus and EPS Surprise | Johnson & Johnson Quote
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