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The world's largest healthcare company, Johnson & Johnson (JNJ - Free Johnson & Johnson Stock Report), recently announced mostly positive first-quarter results. The top line came in at $16.2 billion, which was 3.5% better than a year ago and 2.7% ahead of our target. Reported GAAP earnings matched our estimate of $1.25 a share. However, after backing out charges related to litigation and product recalls, adjusted share profits came in at $1.35, which compared favorably to the $1.29 notched in 2010.

The Pharmaceutical business was the stand-out performer. The group posted revenues of $6.1 billion, which represented a year-over-year increase of 7.5%. Recently launched drugs like STELARA, SIMPONI, and INVEGA SUSTENNA, as well as established treatments like REMICADE, PREZISTA, CAELYX, LEVAQUIN, and RISPERDAL CONSTA, helped to drive the top-line gain. The Medical Devices and Diagnostics segment managed to put together a 3.3% revenue advance in the period, thanks to higher volume from a host of products. On the downside, the Consumer division's recent woes continued, as the top line slipped 2.2%. Domestic sales of over-the-counter medicines were hurt by the suspension of manufacturing at a Pennsylvania-based facility and the ongoing impact on production volumes related to efforts to enhance quality-control and manufacturing systems.

We have decided to raise our full-year estimates. We now expect the top line to come in at $64.5 billion, up marginally from our previous target of $63.7 billion. We also added a nickel to our share-earnings call, which now stands at $4.90. The Consumer business appears to be turning the corner and putting recent product recall and quality-control woes behind it. Meanwhile, the other two segments are performing well, especially overseas, which augurs well for near-term gains.

As expected, Wall Street reacted favorably to the better-than-expected earnings release. Indeed, investors drove the price of this issue up a few percentage points following the announcement.

We are still in Johnson & Johnson's corner, and continue to recommend JNJ shares for just about every type of portfolio. This blue chip has an above average yield and solid long-term total-return potential.

About The Company: Johnson & Johnson manufactures and sells health care products. Its major lines consist of numerous household products. The company operates in a diverse number segments, including Consumer (baby care, nonprescription drugs, sanitary protection, and skin care), Medical Device & Diagnostics (wound closures, minimally invasive surgical instruments, diagnostics, orthopedics, and contact lenses), and Pharmaceutical (contraceptives, psychiatric, anti-infective, and dermatological drugs).

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.