Johnson & Johnson (NYSE:JNJ) shares are down this morning after the healthcare conglomerate said it expects its 2014 earnings to be a penny below expectations and posted strong sales and profit growth for the 4th quarter and 2013.
J&J reported 4th-quarter profits of $3.52 billion, or $1.23 per share, on sales of $18.36 billion for the 3 months ended Dec. 31, 2013, for a profit gain of 37.1% on sales growth of 4.5%. Adjusted to exclude 1-time items, earnings per share were $1.24, 4¢ over expectations on Wall Street.
For the full year, the New Brunswick, N.J.-based medtech giant logged profits of $13.83 billion, or $4.81 per share, on sales of $71.31 billion, representing bottom-line growth of 27.4% on sales growth of 6.1%. Adjusted EPS were $5.52, again ahead of The Street by 4 pennies.
"Johnson & Johnson delivered strong results in 2013 led by the outstanding performance in our pharmaceutical business, the strength of key brands in our US OTC and other consumer businesses and continued progress in integrating Synthes into our medical devices & diagnostics business. We also advanced our longer term growth drivers, bringing innovative solutions to the global healthcare market and executing with excellence," chairman & CEO Alex Gorsky said in prepared remarks. "I am proud of our exceptional Johnson & Johnson colleagues for their commitment to leading with purpose and advancing health and well-being for patients and consumers around the world."
Johnson & Johnson said it expects adjusted EPS of between $5.75 and $5.85, 1¢ per share under The Street’s consensus view for the top end of the range.
Sales for Johnson & Johnson’s medtech business, the world’s largest, were $7.31 billion for the 4th quarter, down 1% compared with the same period last year. Full-year medtech sales were 28.49 billion, up 3.9%.
Revenues for the orthopedic unit were 2.46 billion during the quarter, up 2.8%, and gained 4.9% in the U.S. compared with Q4 2012. Full-year ortho sales rose 21.9% to $9.51 billion, with U.S. ortho sales jumping 22.4% to $5.07 billion.
Total cardiovascular revenues during Q4 2013 were $534 million, up 5.5%; U.S. CV sales were $210 million, up 12.9%. Full-year CV sales were up 4.6% to $2.08 billion overall and up 7.4% to $808 million in the U.S., the company said.
Leerink Partners analyst Danielle Antalffy said the numbers, considered the opening signal for medtech earnings season, could be a sign that markets are improving in the U.S.
"Medtech price and volume trends seem to have largely stabilized though haven’t yet demonstrated meaningful improvement," Antalffy wrote this morning in a note to investors. "It’s possible that 2014 guidance reflects: (1) some level of conservatism – in line with historical guidance – given still seemingly weak though potentially stabilizing medtech utilization trends; and (2) what we estimate to be as much as $0.03-$0.05 of EPS dilution related to last week’s announcement of a sale of its diagnostics business."
JNJ shares were trading at $93.27 apiece as of about 12:10 p.m. today, down 1.9%.