Sharper Focus Pays Dividends At Johnson & Johnson


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Johnson & Johnson has been getting leaner and meaner in hopes of improving the bottom line.

Judging by its Q2 earnings report, the strategy seems to be working. In July, the company and Dow industrials component reported strong second-quarter earnings. Profit growth accelerated for the second straight quarter, rising 12% from a year ago to $1.66 a share. Sales rose 9% to $19.5 billion.

Sales at its Pharmaceutical segment totaled $8.5 billion, up 21% from a year ago. Its newly-launched hepatitis C treatment Olysio contributed sales of $831 million, while sales of its prostate cancer treatment Zytiga totaled $562 million, up 42% from a year ago.

Xarelto, an oral anticoagulant, is also doing well. Last week,Johnson & Johnson ( JNJ ) and its partner Bayer announced new studies to evaluate the drug for new indications.

Sales at its Consumer segment edged 2% higher to $3.7 billion, helped by strong sales of Tylenol and Motrin, skin care products Neutrogena and Aveeno, and baby care products. Overseas, sales of Listerine and feminine protection products did well.

Meanwhile, sales in its Medical Devices and Diagnostics unit were sluggish again, up less than 1% to $7.2 billion.

Earlier this year, Johnson & Johnson sold its Ortho-Clinical Diagnostics unit to private equity firm Carlyle Group for just over $4 billion.

Last week, the Wall Street Journal reported that J&J is also interested in selling its Cordis unit, which makes products for vascular disease that include stents and catheters. The unit could fetch as much as $1.5 billion to $2 billion.

J&J recently paid a quarterly dividend of 70 cents a share, giving it an annual yield of 2.7%. It has been consolidating gains since July. A flat base is in place that shows an early buy point of 104.52. Shares closed Wednesday at 103.76, up 0.4%.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance Investing Ideas
Referenced Stocks: JNJ

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