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Jul 16, 2020

Johnson & Johnson raises outlook in face of virus headwinds

J&J Raises Sales Forecast on Pharmaceutical Growth

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Johnson & Johnson boosted its financial guidance for the year, a sign the health-care giant believes it can successfully navigate the strains placed on the industry by the pandemic. But its second-quarter profit was weaker than analysts had expected.

After reining in its outlook earlier this spring, the company said it now expects adjusted earnings for the full year of US$7.75 to US$7.95 a share, and revenue of US$81 billion to US$82.5 billion.

Key Insights

At a time when the pandemic has frustrated Wall Street’s efforts to accurately forecast corporate profits and sales, J&J’s second-quarter revenue fell 11 per cent from a year earlier to US$18.3 billion, beating analysts’ expectations of US$17.6 billion. Adjusted earnings per share were US$1.67, down from US$2.58 a year earlier, but topping the average estimate of US$1.50.

J&J’s pharmaceutical business helped bolster overall sales in the quarter. Branded-drug segment sales topped US$10.75 billion, marking 2.1 per cent growth from a year prior, driven by Stelara, Darzalex and Imbruvica.

Chief Executive Officer Alex Gorsky said the quarter reflects the “enduring strength of the pharmaceutical business, where we saw continued growth even in this environment.”

But sales of medical devices sank, falling 39 per cent to US$4.2 billion as elective surgeries were delayed due to the pandemic. That still managed to top Wall Street’s more dire estimates of US$3.4 billion.

In June, J&J announced it was accelerating development of its coronavirus vaccine based on the strength of preclinical data, which will be published soon.

The shot will launch into human trials in the second half of July, and the company is aiming for a final-stage trial in mid-September. J&J says it will provide the vaccine on a not-for-profit basis.

Market Reaction

Johnson & Johnson shares were down 0.3 per cent at 9:39 a.m. in New York on Thursday. Through Wednesday’s close, the shares had gained 1.6 per cent so far this year.