Johnson & Johnson
), the first among the large health care companies to report
first quarter results, beat expectations yet again. The company's
first-quarter 2014 earnings (excluding special items) were $1.54
per share, well above the Zacks Consensus Estimate of $1.48 per
share and 6.9% above the year-ago earnings of $1.44 per
Despite the negative impact of currency fluctuation, Johnson
& Johnson recorded growth on the back of strong pharma
Johnson & Johnson's first quarter sales increased 3.5%
year-over-year to $18.1 billion, just above the Zacks Consensus
Estimate of $17.9 billion. While operational factors favorably
impacted sales by 5.3%, currency fluctuations had a negative
impact of 1.8%.
Including one-time items, Johnson & Johnson reported first
quarter earnings of $1.64 per share, well above the year-ago
earnings of $1.22.
The Quarter in Details
First quarter sales increased 2.2% in the domestic market.
Meanwhile, international sales grew 4.5%, consisting of 7.9%
operational growth and 3.4% negative currency impact. Only the
Pharmaceutical segment recorded growth in the reported quarter
with the Medical Devices & Diagnostics segment remaining flat
and the Consumer segment declining.
The Medical Devices & Diagnostics segment posted sales of
$7.1 billion, unchanged from the year-ago period. Sales, however,
declined 2.7% sequentially. While operational factors positively
impacted Medical Devices & Diagnostics segment sales by 1.8%,
this was offset by negative currency movement.
Sales in the domestic market declined 1.6% year-over year to
$3.2 billion; international market sales grew 1.3% year-over-year
to $3.9 billion.
Several Medical Devices & Diagnostics markets have been
facing challenges in the form of austerity measures, pricing
pressure and a slowdown in elective surgeries, which have all
contributed to more tempered growth rates.
Pharmaceutical segment sales increased 10.8% year-over-year to
$7.5 billion (operational growth of 12.2% and negative currency
impact of 1.4%). Sales in the domestic market increased 7.7% to
$3.7 billion, whereas international sales increased 14.0% to $3.8
New products like Zytiga, Invokana, Stelara, Xarelto and
Invega Sustenna continued to perform well. Other growth drivers
included Prezista, and Velcade. First quarter Zytiga sales were
$512 million, up 48.8% year-over-year. Launch in additional
countries and the label expansion for use in chemo-naïve patients
should continue driving sales.
Meanwhile, sales were hampered to a certain extent by generic
competition for products like Aciphex and Concerta.
The Consumer segment recorded revenues of $3.6 billion in the
reported quarter, down 3.2% from the first quarter of 2013.
Foreign currency movement negatively impacted sales in the
segment by 2.6%. Sales in the domestic market declined 2.9%
year-over-year to $1.3 billion, reflecting the Oct 2013
divestment of the sanitary protection business.
Meanwhile, the international segment recorded a 3.4% decline
in sales with currency having a negative impact of 4.1%. OTC
sales increased 3.4% in the U.S. with some key products being
re-launched. Johnson & Johnson has been working on ensuring
reliable and consistent supply of products.
Ups Earnings Guidance
Following the release of better-than-expected first quarter
results, Johnson & Johnson upped its 2014 earnings guidance
range by 5 cents to $5.80 - $5.90 per share. The Zacks Consensus
Estimate for 2014 is currently $5.83 per share, within the
Johnson & Johnson's first quarter results were strong with
the company raising its guidance for the year. Johnson &
Johnson has been trying to offset the declining sales of some of
its important products by bringing in new products through
in-licensing deals and acquisitions. The diversity and strength
of the company's underlying businesses should continue to support
strong growth in future.
Johnson & Johnson is a Zacks Rank #3 (Hold) stock.
Companies that currently look attractive in the healthcare space
Regeneron Pharmaceuticals, Inc.
). While Amgen and Regeneron are Zacks Rank #1 (Strong Buy)
stocks, Allergan is a Zacks Rank #2 (Buy) stock.
ALLERGAN INC (AGN): Free Stock Analysis
AMGEN INC (AMGN): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis
REGENERON PHARM (REGN): Free Stock Analysis
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