Johnson & Johnson raised its full-year sales and earnings forecasts after third-quarter revenue reached $25.4 billion and adjusted earnings came to $2.59 per share. The company also said defense spending in Middle Eastern countries had hurt regional sales of its medical devices.
Who Profited
Revenue for the quarter beat analysts’ average estimate of $25.28 billion, according to LSEG data, while adjusted earnings topped Wall Street’s $2.54-per-share expectation. Johnson & Johnson lifted its full-year reported-sales forecast to about $101.2 billion at the midpoint, up from $101.1 billion. Its adjusted-earnings forecast midpoint increased to $11.10 per share from $11.04.
The company’s shares closed at $263.73 on Monday. They’ve risen 27% this year, beating the broader market and most healthcare peers. Tremfya, the immune disease treatment, posted the quarter’s strongest named sales growth: sales climbed 68% to $2.4 billion, above analysts’ estimate of about $2.19 billion.
Pharmaceutical sales rose 7.7% to $16.76 billion. Sales of Darzalex, a blood cancer treatment, increased about 16% to $4.24 billion, but fell short of analysts’ $4.4 billion expectation. Stelara sales plunged 54% to $716 million amid generic competition, though they remained above Wall Street’s $591 million expectation. Recent approvals for Tremfya in inflammatory bowel diseases have increasingly helped replace lost Stelara revenue.
Budgets Shift Toward Defense
Medical technology division sales increased 2.5% to $8.6 billion overall, while sales outside the United States were basically flat. Chief financial officer Joe Wolk said the Middle East conflict, European austerity measures and pricing in China continued to weigh on international results, “but maybe in a little bit more pronounced way.”
Wolk said the conflict had driven fuel costs sharply higher at home and abroad, but hadn’t yet affected Johnson & Johnson’s costs. It had hurt sales in the region, he said. His account linked the pressure to how governments and markets allocated resources, rather than to higher company costs from fuel.
“Countries still value and actually want premium healthcare systems, think Kuwait, UAE, Saudi Arabia. They pride themselves on having solid healthcare, very good healthcare,” Wolk said. “But their budgets now are being resourced and allocated towards defense.” Wolk named Kuwait, UAE and Saudi Arabia; the source gave no regional sales figures.
Medical Device Sales Under Pressure
Johnson & Johnson’s Abiomed heart pump business also remained slow. A UK study earlier this year raised questions about using Impella pumps during certain high-risk coronary procedures. The source gave no sales figure for Abiomed, but identified the study, the Middle East conflict, European austerity measures and China pricing as pressures on international medical technology sales.
The results show contrasting movements across the company’s products. Tremfya growth helped lift profit. Stelara faced generic competition, while Darzalex missed analysts’ expectations. The forecast increases reflect the company’s own expectations for annual revenue and adjusted earnings; the article gave no separate forecast for medical-device sales outside the United States.