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Johnson & Johnson Offers Weak Outlook, May Look To Sell Diabetes Units

From Johnson & Johnson (NYSE:JNJ) early Tuesday posted mixed fourth quarter results, offered a tepid outlook, and said it would look to sell its diabetes treatment units.

The New Brunswick, NJ-based diversified health care giant reported adjusted Q4 EPS of $1.58, which was $0.02 better than the Wall Street consensus estimate of $1.56. Revenues rose 1.7% from last year to $18.11 billion, missing analysts’ view of $18.26 billion, however.

J&J noted that domestic sales increased 2.6% in the latest period, while international sales gained 0.6%. International results were hampered by currency impacts of approximately 1.3%.

For the full year 2016, Worldwide Consumer sales fell 1.5% to $13.3 billion, Worldwide Pharmaceutical sales rose 6.5% to $33.5 billion, and Worldwide Medical Devices sales fell 0.1% to $25.1 billion. All of those results were also hurt by currency impacts related to a stronger dollar.

Looking ahead, JNJ forecast 2017 EPS to range from $6.93 to $7.08, which would miss Wall Street’s $7.12 estimate. 2017 revenues are seen between $74.1 and $74.8 billion, also lower than analysts’ $75.13 billion view.

The company also intimated it would look to possibly jettison its diabetes treatment units:

Additionally, as part of the Company’s ongoing portfolio management, the Company is announcing it is engaging in a process to evaluate potential strategic options for the Johnson & Johnson Diabetes Care Companies, specifically LifeScan, Inc., Animas Corporation, and Calibra Medical, Inc. Strategic options may include the formation of operating partnerships, joint ventures or strategic alliances, a sale of the businesses, or other alternatives either separately or together. All options will be evaluated to determine the best opportunity to drive future growth and maximize shareholder value. There can be no assurance that this process will result in any transaction or other strategic alternative of any kind.

Johnson & Johnson shares fell $1.31 (-1.15%) in premarket trading Tuesday. Year-to-date, JNJ has declined -1.13%, versus a 1.17% rise in the benchmark S&P 500 index during the same period.

JNJ currently has a POWR Rating of C (Neutral), and is ranked #23 of 131 stocks in the Medical – Pharmaceuticals category.

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