Johnson & Johnson's stock falls as profit beats but sales fall slightly short of estimates

By Ciara Linnane and Eleanor Laise

Healthcare company raises quarterly dividend by 4.2% to $1.24 a share

Johnson & Johnson's stock was on pace for its lowest close since late 2020 on Tuesday, after the healthcare company posted better-than-expected profit for the first quarter but sales that fell slightly short of expectations.

The shares dropped 2% Tuesday morning as the New Brunswick, N.J.-based company (JNJ) reported net income of $5.354 billion, or $2.20 a share, for the quarter, after a loss of $491 million, or 19 cents a share, in the year-earlier period. Adjusted per-share earnings came to $2.71, ahead of the $2.64 FactSet consensus.

Sales rose 2.3% to $21.383 billion from $20.894 billion a year ago, just below the $21.390 billion FactSet consensus.

By division, sales at the innovative medicine segment rose 1.1% to $13.562 billion, while sales at the med tech division rose 4.5% to $7.821 billion.

Cancer drugs Darzalex and Carvykti helped power the company's pharmaceutical sales in the quarter. Carvykti sales roughly doubled from a year earlier, to $157 million, while Darzalex sales grew 19% to $2.7 billion.

The company's top-selling psoriasis treatment Stelara, which is one of the 10 drugs selected for Medicare drug-price negotiations under the Inflation Reduction Act, generated $2.45 billion in sales in the first quarter, up only 0.3% from a year earlier. Continued volume growth for the drug, which is facing loss of market exclusivity in the U.S. and Europe, is expected to be "largely offset by price declines as we move towards biosimilar entry," Johnson & Johnson's vice president of investor relations Jessica Moore said on a call with analysts Tuesday morning.

Sales of Spravato, a nasal spray for treatment-resistant depression, jumped 72% from a year earlier, to $225 million.

The growth in the company's med tech business, meanwhile, bodes well for that market's overall 2024 outlook, Needham & Co. analysts said in a report Tuesday, as procedure volumes continue to hover above pre-pandemic levels.

Johnson & Johnson, which spun out its consumer-healthcare business last year into a separate company called Kenvue Inc. (KVUE), tweaked its full-year sales and adjusted earnings per share guidance.

It is now expecting full-year sales to range from $88.0 billion to $88.4 billion, compared with guidance offered in January of $87.8 billion to $88.6 billion, for a midpoint that's unchanged at $88.2 billion.

The company now sees 2024 adjusted operational EPS of $10.60 to $10.75, compared with earlier guidance of $10.55 to $10.75, raising the midpoint to $10.68 from $10.65.

Separately, Johnson & Johnson said it is raising its quarterly dividend by 4.2% to $1.24 a share. The new dividend is payable June 4 to shareholders of record as of May 21.

The stock has fallen 7.6% in the year to date, while the S&P 500 has gained 6%.

-Ciara Linnane -Eleanor Laise

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04-16-24 1217ET

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