Johnson & Johnson stock reversed higher Tuesday after the health care titan beat Wall Street's third-quarter expectations, but cut its full-year profit forecast.
Following the acquisition of V-Wave, J&J now expects to earn an adjusted $9.88 to $9.98 per share — a cut of nine cents per share from the company's previous outlook. At the midpoint, the new outlook was slightly short of analysts' call for $9.95, according to FactSet. The deal to buy V-Wave, a maker of implantable devices for chronic heart failure, is expected to have a 24-cent impact on 2024 profits.
J&J also raised its sales outlook by $200 million to a midpoint of $88.6 billion, and Johnson & Johnson stock rose 1.6% to close at 164.10 on today's stock market. Analysts projected a slightly lower $88.51 billion in full-year sales.
Johnson & Johnson stock is forming a flat base with a buy point at 168.85, according to MarketSurge chart analysis. Shares leapfrogged their 50-day line on Tuesday.
Johnson & Johnson Stock: Third-Quarter Beat
Overall, third-quarter metrics beat analysts' expectations. The company came in with adjusted profit of $2.42 per share, down 9% year over year, but ahead of forecasts for $2.21 a share. J&J called out a tax charge that had a 1,900-basis point impact on earnings.
Sales, though, climbed 5.2% to $22.5 billion and topped projections for $22.17 billion.
The innovative medicines business brought in $14.58 billion in sales, growing 4.9%. Third Bridge analyst Lee Brown called out revenue from cancer treatments, particularly Darzalex, for almost 19% year-over-year growth.
"Darzalex is the most prescribed monoclonal antibody treatment for newly diagnosed multiple myeloma and the treatment continues to gain market share across all regions," he said in an email to Investor's Business Daily. "The drug generated third-quarter revenue of over $3 billion, increasing 20.7% on a reported basis and 22.9% year over year in constant currency."
Erleada, a prostate cancer treatment, came in strong with 25.4% growth to $790 million. That topped Johnson & Johnson stock analysts' view by 3.1%, Brown said. Cell therapy Carvykti "continues to build momentum." Sales soared about 88% to $286 million, accelerating from 60% growth in the second quarter.
'Robust' Pipeline, But Lawsuits Pending
Down the road, there's a lot to like about Johnson & Johnson stock, says Brian Mulberry, a client portfolio manager at Zacks Investment Management. The company has a "robust" pipeline of new products. But it will have to address more than 62,000 lawsuits related to its talc-based products, including baby powders.
"Bottom line, a mixed result in terms of the short-term guidance," he said in an email. "There are very positive earnings structures developing both organically and the recent bolt-on acquisitions should begin to drive better growth, but impending legal battles and currency headwinds could prove challenging."
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