Health and Healthcare

Johnson & Johnson Revenues, 2017 Outlook Weigh on Shares

Paul Ausick

Published: January 24, 2017 8:35 am

Last Updated: January 12, 2020 3:36 pm

Johnson & Johnson (NYSE: JNJ) reported fourth-quarter and full-year 2016 results before markets opened Tuesday morning. The health care giant reported quarterly adjusted diluted earnings per share (EPS) of $1.58 on revenue of $18.1 billion. In the same period a year ago, it reported EPS of $1.44 on revenue of $17.81 billion. Fourth-quarter results also compare to the consensus estimates for EPS of $1.56 on revenue of $18.28 billion.

For the full year, the company reported EPS of $6.73 and revenues of $71.89 billion, compared with 2015 EPS of $6.20 on $70.07 billion in revenue. Analysts were looking for EPS of $6.71 and revenues of $72.03 billion.

The company also announced 2017 full-year guidance for sales in a range of $74.1 billion to $74.8 billion, reflecting expected operational growth in the range of 4% to 5%. Excluding the impact of acquisitions and divestitures, operational sales growth is expected to be in the range of 3.0% to 3.5%. Johnson & Johnson gave full-year adjusted earnings guidance of $6.93 to $7.08 per share, reflecting expected operational growth in the range of 4.8% to 7.0%.

Consensus estimates call for fiscal year 2017 EPS of $7.11 on revenues of $75.1 billion. For the first quarter, analysts are looking for $1.76 in EPS on revenues of $18.14 billion.

CEO Alex Gorsky said:

The strong adjusted sales and EPS growth was driven by the impressive performance of our Pharmaceutical business and continued momentum in our Medical Device business and share gains while improving profitability in our Consumer business. Looking forward to 2017, we expect to continue driving sustainable, long-term growth through the new products, science and innovation that our talented colleagues and partners of Johnson & Johnson are advancing to positively impact human health.

Johnson & Johnson also announced that it is evaluating strategic options for its Diabetes Care Companies, including specifically LifeScan, Animas and Calibra Medical. Options up to and including sales of the businesses are under consideration.

The soft outlook will have the most impact on the stock’s price in Tuesday’s trading, particularly because revenues for the fourth quarter and the year were both short of expectations. In our 2017 bull/bear case for health care stocks we noted that Johnson & Johnson’s total return for 2016 was about 15%, but that could fall to below 12% in 2017.

Shares closed at $113.91 on Monday and traded down about 1.7% in Tuesday’s premarket at $112.00. The stock’s 52-week range is $97.14 to $126.07. The 12-month consensus analyst price target of about $125.68 before this morning’s results were announced.