Health care giant Johnson & Johnson (JNJ) is scheduled to report third-quarter results on Tuesday.
The New Brunswick, New Jersey-based company, founded in 1886, operates in three segments: Consumer, Pharmaceutical, and Medical Devices and Diagnostics. Pharmaceutical as well as Medical Devices and Diagnostics contributed about 37% each to the company's total sales in 2009, with around 25% coming from the Consumer segment.
Johnson & Johnson is the name behind several common products such as Listerine antiseptic mouth-rinse, Acuvue contact lenses and Band-Aids. Its products include inflammatory disorder treatment Remicade, Schizophrenia drug Risperdal Consta, Procrit for stimulating blood cell production and multiple myeloma drug Velcade. It also makes antipsychotic Invega, Prezista for treating HIV/AIDS patients and Attention Deficiency Hyperactivity Disorder treatment Concerta.
While the company has several products that help lead a healthier life, it also hit the headlines for product recalls this year. Early this month, Johnson & Johnson's subsidiary McNeil Consumer Healthcare continued its recall of Tylenol products by adding one more lot to its original recall of the over-the-counter product in January. The recalled product was said to have uncharacteristic musty or moldy odor. This is the fourth time that the same product has been involved in a recall this year.
In August, the company had announced a voluntary recall of two hip-replacement systems due to a higher rate of revision surgeries required by patients.
In the just concluded quarter, Johnson & Johnson announced the purchase of the remaining stake in Netherlands-based biopharmaceutical company Crucell N.V. (CRXL) that it does not already own for about $2.43 billion. The transaction, which is expected to close in the first quarter of 2011, will help Johnson & Johnson grab a bigger share of the vaccines market. During the quarter, the company also announced the purchase of Micrus Endovascular Corp. (MEND) for $480 million in cash and stock.
On average, 18 analysts polled by Thomson Reuters expect the company to have earned $1.15 per share in the third quarter, with estimates ranging between $1.10 and $1.19 per share. Revenue for the quarter is estimated to be $15.18 billion. Analysts' estimates typically exclude special items.
Credit Suisse said recently in a client note that it expects decent third-quarter results for U.S. Pharmaceuticals. The firm's expectations for the quarter are in-line or slightly above consensus as pricing and volumes served as tailwinds.
"Fundamental challenges remain for the sector, however, and we expect much of the attention on the earnings calls to be centered on what the impact of EU pricing and US healthcare reform will be in 2011 and beyond. We will also be searching for insights on key pipeline products and capital allocation strategies as each major pharma company navigates its own patent cliff," the brokerage said.
In the year-ago quarter, Johnson & Johnson's net earnings were $3.345 billion or $1.20 per share. Sales in the quarter amounted to $15.081 billion.
In the second quarter of the current fiscal, the company reported a 7% growth in profit, helped by a marginal rise in sales and lower tax provision. Net earnings in the quarter totaled $3.449 billion or $1.23 per share. Excluding items, net income was $3.382 billion or $1.21 per share. Sales were $15.3 billion.
While announcing the second-quarter results, the company had lowered its full-year 2010 earnings outlook to a range of $4.65 to $4.75 per share from the prior range of $4.80 to $4.90 per share, which itself was a slashing from the original forecast of $4.85 to $4.95 per share. The latest reduction reflected the impact of the voluntary recalls announced earlier this year of some over-the-counter medicines and the suspension of manufacturing at the McNeil Consumer Healthcare facility, as well as unfavorable changes in foreign currency exchange rates.
The company is likely to update its fiscal 2010 outlook today. In addition, Johnson & Johnson may dwell further on its product recalls as well as the progress it has made with the announced acquisitions.
Drugmaker Pfizer, Inc. (PFE) is slated to report third-quarter results on November 2. Analysts look for earnings of $0.51 per share on revenues of $16.71 billion.
JNJ closed Monday at $63.86, up $0.29 or 0.46%, on 10.85 million shares and dropped $0.09 in the after-hours trade. For the past year, the stock has been trading in the range of $56.86-$66.20.
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