J&J Earnings Beat Estimates; Guidance Raised As FX Headwinds Ease
Medical giant Johnson & Johnson ( JNJ ) beat Q1 estimates and raised guidance Tuesday morning, sending its stock to its fifth recent record high. J&J reported earnings of $1.68 a share, up 8% from the year-earlier quarter and beating analysts’ consensus by 3 cents, according to Thomson Reuters. Sales rose 0.6% to $17.48 billion, matching consensus. J&J said that the foreign-exchange impact knocked 6.6 percentage points off sales growth. Nonetheless, the forex headwinds finally seem to be abating. J&J cited the improved forex outlook as the reason it was raising full-year sales guidance by $400 million, to $71.2 billion to $71.9 billion. It also added 10 cents to EPS guidance, now $6.53 to $6.68. IBD’s Take: Johnson & Johnson rated No. 1 in its group, but CR is iffy . “Our Pharmaceuticals business continues to deliver impressive levels of growth, we have steady improvement in our Consumer business, and we are seeing momentum in our Medical Devices businesses, all of which are fueling our optimism for the full-year ahead,” J&J CEO Alex Gorsky said in a statement. J&J stock was up 2% in early trading on the stock market today , touching a record high of 113.60 intraday. The stock is up more than 10% for the year so far, and it is the first of three medical stocks that are hitting new highs and are reporting this week, the others being Intuitive Surgical ( ISRG ) this evening and Stryker ( SYK ) late Wednesday. “This morning, J&J continued the growth momentum the company has seen in recent quarters, again delivering organic sales growth acceleration and its second consecutive quarter of double-digit EPS growth on an adjusted, operational basis,” wrote Leerink analyst Danielle Antalffy in a research note. She noted that, excluding the impact of foreign exchange, M&A activity and shrinking sales of hepatitis C drug Olysio — which was made obsolete when Gilead Sciences ( GILD ) released Harvoni in late 2014 — sales rose 6.9%. Operating EPS growth was just above 10%. Credit Suisse analyst Vamil Divan wrote that the pharma sales beat was driven by the immunology franchise — Remicade, Simponi and Stelara — as well as its stroke prevention treatment Xarelto. But another top seller, diabetes drug Invokana, missed consensus by 19%. Investors had been wondering if Invokana would take a hit from Eli Lilly ‘s ( LLY ) Jardiance, which last September proved that it could dramatically cut deaths from heart failure but didn’t get a sales bump from this in Q4.