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Johnson & Johnson shares dipped Tuesday as investors digested the company's second-quarter earnings results.
The sprawling health company beat revenue and adjusted earnings estimates for the quarter and narrowed its full-year forecast. J&J's pharmaceutical business and medical device segments topped expectations, while and its consumer unit fell short.
“It feels like consumer and (medical technology) are still in turnaround mode a bit,” said Jefferies analyst Jared Holz. “The analyst day they recently had, the key component was to get the focus on the longer term growth dynamics of those businesses versus the near term. I think that’s sort of what you’re seeing here.”
The company posted adjusted earnings of $2.10 per share, compared with the $2.07 Wall Street analysts polled by Thomson Reuters expected. Revenue hit $20.8 billion, up 10.6 percent from the previous year, surpassing estimates of $20.39 billion.
Here's how the company did compared with what Wall Street analysts polled by Thomson Reuters expected:
Adjusted earnings: $2.10 vs. $2.07 per shareRevenue: $20.8 billion vs. $20.39 billionJ&J reported net income of $4 billion, or $1.45 per share, in the second quarter. After stripping out amortization expenses and special items, the company earned $5.7 billion, or $2.10 per share, topping analyst estimates of $2.07 per share.
In the quarter, J&J's revenue increased 10.6 percent o $20.8 billion from $18.84 billion a year earlier. On an operational basis, J&J's revenue grew 8.7 percent. Excluding the impact of acquisitions, divestitures and currency, worldwide sales were up 6.3 percent.
J&J refined its full-year revenue forecast to between $80.5 billion and $81.3 billion, from a previously given $81 billion and $81.8 billion. It tweaked its full-year adjusted earnings forecast to between $8.07 and $8.17 per share from $8 and $8.20 per share.
Pharmaceuticals, particularly cancer drugs, have fueled J&J’s success. In the quarter, the business posted $10.4 billion in revenue, a 20 percent year-over-year increase that topped expectations of $9.95 billion, according to consensus estimates from StreetAccount. Excluding the net impact of acquisitions and divestitures, worldwide sales increased 17.6 percent.
J&J's medical device unit increased 3.7 percent on an operational basis from last year, reaching $7 billion and topping Street estimates of $6.90 billion. Excluding the net impact of acquisitions and divestitures, worldwide sales increased 1.9 percent.
The company has continued pruning its medical device business, including selling its LifeScan diabetes unit to private-equity firm Platinum Equity for $2.1 billion. It received a binding offer last month from Fortive Corp. for its Advanced Sterilization Products business for $2.8 billion.
Consumer continued to lag. In the quarter, it generated $3.50 billion in revenue up 0.7 percent from the year-ago quarter and short of the $3.59 billion analysts had expected. Excluding the net impact of acquisitions and divestitures, worldwide sales increased 0.4 percent.
In May, the company unveiled its revamped baby care product line, which it plans to roll out to stores in August.
A Missouri jury last week ordered J&J to pay $4.69 billion to 22 women who claim the company's talc-based products, including its baby powder, contained asbestos and allegedly caused them to develop ovarian cancer. J&J has vowed to fight the verdict.
Shares of J&J slid 0.5 percent Tuesday in premarket trading. They have shed nearly 11 percent this year.
