Johnson & Johnson’s Q4 Revenue Falls Short of Street’s Estimate (JNJ)

johnson & johnsonJohnson & Johnson (NYSE: JNJ) on Tuesday reported better than expected fiscal fourth-quarter earnings thanks to a favorable tax rate; nevertheless, shares slipped as revenue fell short of Street’s expectations even as the company disclosed plans to either sell or spin off its diagnostic business.

JNJ’s decision to sell its Ortho Clinical Diagnostic Business, which generates $2 billion a year, come at a time when several drug makers are streamlining businesses by shedding units and slashing costs to overcome the impact of price controls in international markets and pressure on payments from governments and insurance companies.

For instance; just few weeks ago Abbot Laboratories announced that it has decided to split its drug unit while earlier in 2012, Pfizer announced spinning of its animal health products making division.

In the fiscal fourth quarter, JNJ said its adjusted earnings (earnings excluding onetime items) stood at $1.19 a share, edging past analysts’ consensus estimate for earnings of $1.17 a share.

Earnings on GAAP basis or earnings including onetime items such as $800 million charge related  mainly to product recalls ( “metal-on-metal” hip),  came at $2.6 billion, or 91 cents a share compared to $218 million, or 8 cents a share, in the year earlier quarter, when the company took charges of more than $3 billion on product recalls.

According to Matt Miksic, an analyst at Piper Jaffray, a combination of favorable tax rate and JNJ’s cost cutting measures helped bolstering its bottom line. Miksic pointed out that robust sales of JNJ’s traditional artificial hips and artificial knees also boosted profits. The combined sales of these two products soared 7% during the fiscal fourth quarter.

For the quarter, J&J’s global revenue climbed 8 percent to $17.56 billion, falling short of Wall Street expectation of $17.7 billion.

While sales of prescription drugs rose 7 percent to $6.52 billion, sales of medical devices climbed nearly 14 percent to $7.38 billion. Sales in consumer products category dropped almost 3 percent to $14.4 billion.

For fiscal 2013, the Company is now expecting adjusted earnings in the range of $5.35 a share to $5.45 a share while analysts polled by Thomson Reuters were expecting earnings of $5.49 a share.




Ed Liston is a senior contributing editor at An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.