Johnson & Johnson overcame another quarter of inflationary pressure on Tuesday as its pharmaceutical business outperformed expectations, but JNJ stock pared back gains by the close.
Despite bearing the brunt of exchange-rate headwinds, J&J's pharmaceutical division tacked on the best growth during the third quarter. Sales of the segment — Johnson & Johnson's biggest — surged 9% on an operational basis to $13.2 billion. On a strict, as-reported basis, sales rose a more modest 2.6%. Still, that was better than the medical technology and consumer health segments.
The company also maintained its sales guidance and narrowed its earnings outlook.
"We would normally view this as a decent quarter with unsurprising guidance," Edward Jones analyst John Boylan said in a note to clients. "However, considering the challenging global economic environment and negative impacts of currency, it was a better quarter than meets the eye."
On the stock market today, JNJ stock dipped a fraction to 166.01. Shares are forming a flat base with a buy point at 183.45, according to MarketSmith.com.
JNJ Stock: Key Drugs Led Growth
During the quarter, Johnson & Johnson earned $2.55 per share on $23.79 billion in revenue. On a year-over-year basis, earnings fell 1.9%, but they topped forecasts for $2.48 a share. Sales climbed 1.9% on a strict, as-reported basis and beat expectations for $23.36 billion.
Trailing pharmaceutical sales, the medical technology business grew 2.1% to $6.78 billion. Operationally, sales advanced 8.1%. Consumer health sales fell a fraction on a reported basis, but rose 4.7% on an operating basis, to nearly $3.8 billion.
Lee Brown, global sector lead for health care at research firm Third Bridge, called out J&J's Darzalex Faspro, Tremfya and Invega for strong growth. Darzalex is a multiple myeloma treatment. Tremfya treats psoriasis and psoriatic arthritis And Invega is a schizophrenia medicine.
"The Darzalex franchise, which generated over $2 billion of revenue and increased roughly 39% year over year on an operational basis in the third quarter, continues to generate phenomenal growth with its strong sales trajectory expected to be sustained," he said in a note.
Guidance Largely Maintained
Meanwhile, JNJ stock analysts pointed out medtech sales did better than expected.
"There has been some lingering debate on whether procedures slowed down," Evercore ISI analyst Vijay Kumar said in a note. "These numbers should allay those fears."
For the year, Johnson & Johnson kept its guidance for $93 billion to $93.5 billion in sales. But the company narrowed its adjusted profit guidance in a range of $10.02 to $10.07 per share. The new earnings outlook kept the same midpoint of $10.05 a share.
JNJ stock analysts forecast $10.07 in per-share earnings and $94.94 billion in sales.
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