Johnson & Johnson's
) fourth quarter 2012 earnings (excluding special items) of $1.19
per share were a couple of cents above the Zacks Consensus
Estimate of $1.17 and 5.3% above the year-ago earnings of $1.13
Despite the negative impact of currency fluctuation, Johnson
& Johnson recorded growth on the back of strong product
Johnson & Johnson's fourth quarter sales increased 8.0%
year-over-year to $17.6 billion, just shy of the Zacks Consensus
Estimate of $17.7 billion. While operational factors favorably
impacted sales by 9.3%, currency fluctuations had a negative
impact of 1.3%. Results included the impact of the recently
completed Synthes acquisition, which contributed 5.6% to global
operational sales growth.
Including one-time items, Johnson & Johnson reported
fourth quarter earnings of 91 cents per share, well above the
year-ago earnings of 8 cents.
Johnson & Johnson's full-year earnings increased 2.0% to
$5.10 per share, a penny above the Zacks Consensus Estimate of
$5.09. Johnson & Johnson met the the higher end of its 2012
guidance range of $5.05 - $5.10. Full year sales increased 3.4%
to $67.2 billion, slightly below the Zacks Consensus Estimate of
Sales increased 3.2% in the domestic market. Meanwhile,
international sales grew 3.5%, consisting of 8.4% operational
growth and 4.9% negative currency impact. While both the
Pharmaceutical and the Medical Devices & Diagnostics segments
posted an increase in sales, the Consumer segment recorded a
decline in sales.
The Medical Devices & Diagnostics segment posted sales of
$27.4 billion, up 6.4%. While operational factors positively
impacted Medical Devices & Diagnostics segment sales by 8.7%,
foreign exchange movement negatively impacted sales by 2.3%.
Sales in the domestic market increased 8.7% to $12.4 billion;
international market sales increased 4.5% to $15.1 billion.
Results included the impact of the Synthes acquisition.
Primary contributors to growth included orthopedic sales from
Synthes products, Biosense Webster's electrophysiology business,
Vistakon's disposable contact lenses and some Specialty Surgery
products. Orthopedics sales increased 34.3% to $7.8 billion
thanks to the Synthes acquisition. The Cardiovascular Care
franchise declined 13.2% reflecting Johnson & Johnson's exit
from the drug-eluting stent market.
Several Medical Devices & Diagnostics markets have been
facing challenges in the form of European austerity measures,
pricing pressure and a slowdown in elective surgeries, which have
all contributed to more tempered growth rates. However, there
have been some signs of improvement in the rate of growth in
hospital admissions and surgeries, including joint
Pharmaceutical segment sales increased 4.0% to $25.4 billion
(operational growth of 6.8% and negative currency impact of
2.8%). Sales in the domestic market increased 0.3% to $12.4
billion whereas international sales increased 7.9% to $12.9
While the Doxil/Caelyx supply situation and the genericization
of Levaquin affected sales, recently launched products like
Zytiga, Incivo, Xarelto, Stelara, Simponi and Invega Sustenna
continued to perform well. Johnson & Johnson also recorded
incremental sales due to the amendment of its distribution
) for Remicade. Other growth drivers include Prezista as well as
Velcade. Zytiga sales were $961 million in 2012.
The Consumer segment recorded sales of $14.4 billion in 2012,
down 2.9%. Foreign currency movement negatively impacted sales in
the segment by 3.4%. Sales in the domestic market declined 2.0%
to $5.0 billion, whereas international sales declined 3.4% to
2013 Guidance Lags Expectations
Although Johnson & Johnson's fourth quarter and full-year
2012 earnings surpassed expectations, 2013 guidance was
disappointing. Johnson & Johnson expects 2013 earnings in the
range of $5.35 - $5.45 per share. Guidance was well below the
Zacks Consensus Estimate of $5.50 per share and shares were down
in pre-market trading.
Johnson & Johnson currently carries a Zacks Rank #2 (Buy).
While we expect the company to continue facing headwinds in the
form of pricing pressure, currency fluctuation, manufacturing
issues and healthcare reform, we believe Johnson & Johnson's
diversified business model, lack of cyclicality, and strong
financial position will continue helping it pave its way through
Other large-cap pharma companies like
) that will be reporting fourth quarter and full year 2012
results shortly, are also Zacks Rank #2 stocks.
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