By Bhanvi Satija and Manas Mishra
(Reuters) – Healthcare conglomerate Johnson & Johnson on Tuesday raised the midpoint of its full-year earnings forecast by 10 cents despite beating first-quarter estimates by 18 cents, and its shares fell 2%.
Sales across J&J’s three businesses – pharmaceuticals, medical devices and consumer – all topped Wall Street estimates for the first three months of the year.
J&J now expects to earn $10.60 to $10.70 per share, up from its prior forecast of between $10.45 and $10.65.
The company was “responsibly optimistic” about 2023, Chief Financial Officer Joseph Wolk said on a conference call, pointing to fierce competition for cancer drug Imbruvica and inflation as some of the hurdles it was facing this year.
“EPS guidance was not raised by as much as the earnings upside we saw this quarter, but considering it is still early in the year, we view guidance as appropriately conservative,” said Edward Jones analyst John Boylan.
J&J is banking on a recovery in its medical devices unit this year and strong demand for key drugs such as cancer therapy Darzalex.
The company reported overall sales of $24.7 billion for the quarter, but posted a net loss of $68 million due to a one-time charge related to a second bankruptcy filing by its LTL Management unit as it attempts to settle more than 38,000 lawsuits claiming its talc products cause cancer. The company has said the products are safe and do not cause cancer.
The company said earlier this month it would take a $6.9 billion charge related to the bankruptcy. J&J said the ongoing spinoff of its consumer health unit would not be impacted by the bankruptcy filing.
First-quarter sales at its pharmaceuticals unit was boosted by better-than-expected revenue from its COVID-19 vaccine, as well as Crohn’s disease treatment Stelara, which is expected to face competition this year.
Stelara sales of $2.44 billion beat estimates of $2.41 billion, as did prostate cancer treatment Erleada with sales of $542 million versus estimates of $500 million. Darzalex met expectations of $2.26 billion.
Sales of $747 million for the COVID vaccine that failed to gain much traction in the U.S. blew past diminished analysts’ estimates of $50 million.
A recovery in medical procedures after being weighed down by hospital staffing shortages helped the medical device unit post sales of $7.48 billion, topping estimates of $7.31 billion.
Consumer health sales rose 7.4% to $3.85 billion, surpassing estimates of $3.62 billion, powered by price hikes to offset the impact from inflation.
On an adjusted basis, the company posted first-quarter earnings of $2.68 per share, beating estimates of $2.50 according to Refinitiv data.
(Reporting by Bhanvi Satija and Manas Mishra in Bengaluru; Editing by Sriraj Kalluvila and Bill Berkrot)
