Johnson & Johnson shares rise on earnings beat despite mixed outlook

Johnson & Johnson's stock was in the green on Wednesday, after the pharmaceutical giant reported second-quarter earnings and sales that surpassed analysts' expectations, largely driven by its innovative medicines segment.

The New Brunswick, New Jersey-based company revealed a mixed outlook for the future, however, raising its guidance for operational sales due to an “improved performance”, but lowering its adjusted earnings per share (EPS) forecast.

It attributed that adjustment to a number of factors, including the recent $13bn acquisition of Shockwave Medical.

For the second quarter, Johnson & Johnson's net income declined to $4.69bn, or $1.93 per share, from $5.14bn, or $2.05 per share, in the same period last year.

However, excluding non recurring items, adjusted earnings per share increased to $2.82, surpassing the FactSet consensus of $2.71.

The firm reported a 4.3% rise in sales to $22.45bn, exceeding the FactSet consensus of $22.33bn.

Innovative medicine sales grew 5.5% to $14.49bn, while MedTech sales increased by 2.2% to $7.96bn, though the latter fell short of expectations.

Chief financial officer Joseph Wolk indicated that the 2024 outlook for MedTech sales growth had been adjusted to “closer to 6%”, from the previously-anticipated range of 5% to 7%.

He noted strong momentum in key in-market products and significant progress in the drug pipeline within the innovative medicine segment.

Among the company's top-selling drugs, sales of Stelara, a psoriasis treatment, rose 3.1% to $2.89bn, and sales of the cancer treatment Darzalex increased 18.4% to $2.878bn.

However, sales of infectious disease drugs fell 13.9% to $965m, with Covid-19 vaccine sales plummeting 40% to $172m.

Looking ahead, Johnson & Johnson adjusted its earnings per share guidance to between $9.97 and $10.07, down from the previous range of $10.57 to $10.72.

The adjusted operating earnings per share guidance, excluding acquisitions, was raised slightly to $10.73, while the outlook including dilution from acquisitions was lowered to $10.00 to $10.10.

Despite those adjustments, the company raised its operational sales forecast to between $89.2bn and $89.6bn, from its previous range of $88.7bn to $89.1bn.

The guidance for estimated reported sales remained steady at $88bn to $88.4bn.

Additionally, Johnson & Johnson declared a regular third-quarter cash dividend of $1.24 per share, payable on 10 September to shareholders of record as of 27 August.

At 1146 EDT (11646 BST), shares in Johnson & Johnson were up 3.24% at $155.90.

Reporting by Josh White for Sharecast.com.