Pharmaceutical giant Johnson & Johnson (JNJ) is scheduled to report financial results for the second quarter before the market opens on Tuesday, with analysts expecting the company to report a near 5% increase in profit from the year-ago quarter despite product recalls at its OTC drug unit.
On average, 16 analysts polled by Thomson Reuters expect the company to earn $1.21 per share for the quarter, with estimates in the range of $1.16 to $1.25 per share. Quarterly revenues are expected to be $15.66 billion. Analysts' estimates typically exclude special items.
Founded in 1886, the New Brunswick, New Jersey-based Dow component handles research and development, manufacturing and sales of various healthcare products, and has over 250 operating companies. The company operates in three segments - Consumer Health Care, Pharmaceutical and Medical Devices & Diagnostics. In fiscal 2009, the Med Devices & Diagnostics division generated nearly 38% of total revenues and the Pharmaceutical segment contributed 36%, while revenue from the Consumer division formed 26% of the total.
The maker of Listerine antiseptic mouth-rinse, Acuvue contact lenses and Band-Aids is grappling with generic competition that have impacted its revenues. The drug maker has been trying to offset the effects of generics by sprucing up its other products, as well as foraying into vaccines with its strategic collaboration with Netherlands-based Crucell N.V. for the discovery, development and commercialization of monoclonal antibodies and vaccines for the treatment and prevention of influenza and other infectious and non-infectious diseases.
Johnson & Johnson's blockbuster drugs, the antipsychotic drug Risperdal and epilepsy treatment Topamax, are finding it hard to take on competing generic versions. Risperdal lost patent exclusivity in 2008 and Topamax lost U.S. patent exclusivity in March 2009.
For the second quarter of fiscal 2009, the company reported a marginal decline in profit to $3.21 billion or $1.15 per share, reflecting sales declines across all business segments and geographies. Sales for the quarter declined 7.4% to $15.24 billion in the quarter.
At the same time, for the first quarter, Johnson & Johnson reported 29% year-over-year growth in profit to $4.53 billion or $1.62 per share from $3.51 billion or $1.26 per share in the same quarter last year, helped by a gain from litigation matters. Excluding items, net earnings grew to $3.62 billion or $1.29 per share from $3.51 billion or $1.26 per share last year. Quarterly sales grew 4% to $15.63 billion from $15.03 billion in the previous year, boosted by strong international sales and positive currency impact.
While announcing the first-quarter results, Johnson & Johnson lowered its earnings outlook for the full year to a range of $4.80 to $4.90 from its prior range of $4.85 to $4.95, excluding the impact of special items, to reflect recent changes in foreign currency exchange rates as well as the healthcare reform. For the full year, analysts are currently looking for earnings of $4.80 per share on revenues of $63.22 billion.
The company has been dodged by a series of recalls at its McNeil Consumer Healthcare unit, which recalled over-the-counter, or OTC, medicines like Benadryl, Motrin and Tylenol. The recall in January followed consumer complaints of a musty or moldy odor that has since been linked to the presence of trace amounts of a chemical called 2,4,6-tribromoanisole or TBA.
Quarterly sales at the company's Consumer Health Care division sales is expected to be feel the impact of the recall of these OTC drugs as well as a less severe cold and flu season. These impacts could also lead the company to lower its fiscal 2010 guidance again. Meanwhile, Johnson & Johnson has been entering into deals, which should help boost its revenues in the long-term.
During the just concluded quarter, the company agreed to acquire Micrus Endovascular Corp. (MEND), a global developer and manufacturer of minimally invasive devices to address hemorrhagic and ischemic stroke, for $23.40 per share in an about $480 million cash for stock exchange deal. The transaction, which is slated to close in the second half of 2010, is expected to be breakeven to slightly dilutive to Johnson's 2010 earnings per share.
The company's Ortho-McNeil-Janssen Pharmaceuticals, Inc. unit agreed in June with Swedish pharmaceutical company Diamyd Medical AB (DMYDY.PK) to develop and commercialize the Diamyd diabetes therapy, which is a GAD65 antigen based therapy for the treatment and prevention of type 1 diabetes and associated conditions. The transaction is expected to close in the third quarter of 2010, subject to antitrust clearance.
Among other large pharmaceutical companies, New York-based Pfizer, Inc. (PFE) is slated to announce financial results for the second quarter on August 3. Analysts expect the company to report quarterly earnings of $0.52 per share on revenues of $16.65 billion.
Cincinnati, Ohio-based Procter & Gamble Co. (PG) is scheduled to announce second-quarter results on August 3. The Street is looking for earnings of $0.73 per share for the second quarter, on quarterly revenues of $19.09 billion.
JNJ closed Monday's regular trading session at $59.57, up $0.13 or 0.22% on a volume of 10.28 million shares, lower than the three-month average volume of 15.76 million shares. In the past 52-week period, the stock has been trading in a broad range of $57.55 to $66.20.
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