Johnson & Johnson’s share price down, posts a 59% increase of its third-quarter net income and boosts annual earnings forecast

October 15, 2014 10:07 am

The largest health-care manufacturer in the world – Johnson & Johnson made an official statement that its net income increased over the third quarter of the fiscal year. The company also boosted its annual earnings projection thanks to its new hepatitis C drug called Olysio.

Mr. Caruso, the Chief Executive Officer of the company, said in a statement, cited by Bloomberg: “We plan to remain competitive in the hepatitis C category and we will work with payers to maintain access for Olysio in the marketplace. Given the size, complexity and diversity of this patient population, we think physicians will continue to need multiple treatment options.”

According to Johnson & Johnson’s announcement, the company’s net income increased by 59% and reached $4.75 billion, or $1.66 per share. In comparison, Johnson’s net income a year earlier amounted to $2.98 billion, or 1.04 per share. The increase is considered to be a result of the $1.1-billion gain, generated from the sale of its Ortho Clinical Diagnostics division. The U.S.-based company also stated that its earnings, excluding one-time items, amounted to $1.50 per share. This result surpasses the initial analysts’ forecasts of 6 cents. Sales amounting to $18.47 billion were up 5% in comparison with the same period a year earlier.

In addition, Johnson & Johnson revised up its annual per-share earnings forecast to a range of $5.92 to $5.97. The company has previously projected 2014 per-share earnings within the range of $5.85 to $5.92. The company’s Chief Executive Officer warned that these earnings could be affected by the performance of the strong dollar by 7 to 9 cents over the fourth financial quarter.

A health-care analyst at Edward Jones, Ashtyn Evans, commented on the company’s performance for Bloomberg: “J&J has done a strong job in executing pharmaceutical launches, with Olysio for hepatitis C and Xarelto, a blood thinner, driving the strong growth we’ve seen for the pharmaceutical segment. While growth is slow in the medical device segment, they did beat expectations.”

Johnson & Johnson was 2.13% down to close at $97.01 per share yesterday, marking a one-year increase of 8.03%. The company is valued at $279.55 billion. According to CNN Money, the 19 analysts offering 12-month price forecasts for Johnson & Johnson have a median target of $110.00, with a high estimate of $120.00 and a low estimate of $102.00. The median estimate represents a +13.39% increase from the last price of $97.01.

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