Johnson & Johnson (JNJ, Financial) reported higher-than-expected profit for the third quarter, fueled by a surge in sales of its cancer drug Darzalex. Despite this success, the company adjusted its full-year forecast to account for its recent acquisition of a medical device company. The adjusted earnings per share (EPS) stood at $2.42, exceeding Wall Street's prediction of $2.19.
Pharmaceutical sales rose nearly 5%, surpassing analyst expectations by over $400 million, with Darzalex sales jumping more than 20%. Analysts anticipate Darzalex to generate approximately $11 billion in revenue for the company this year. Johnson & Johnson is striving to maintain its growth trajectory amid the expiration of its psoriasis treatment Stelara's exclusivity, as its biosimilar versions have entered the European market and are expected in the U.S. early next year.
Efforts to expand cancer and immunology drug approvals have provided support for the company. CFO Joe Wolk expressed satisfaction with the company's overall performance, positioning it well to finish the year strongly.
In terms of litigation, Johnson & Johnson made progress in resolving lawsuits related to talcum powder, a long-standing issue affecting investor sentiment. A recent favorable legal ruling allows a subsidiary to handle claims in a Texas court, avoiding an adverse decision in a New Jersey appellate court.
During the quarter, Johnson & Johnson acquired V-Wave Ltd. for $1.7 billion, which is developing an implantable device for heart failure treatment. As a result, the company adjusted its 2024 profit forecast to $9.88-$9.98 per share, down from the earlier lower estimate of $9.97 per share. Excluding acquisition-related costs, the EPS projection was raised to $10.15, a 10-cent increase.
Johnson & Johnson has focused on profitable prescription drugs and medical devices by spinning off its consumer health segment into Kenvue (KVUE) last year. Subsequent acquisitions include Shockwave Medical for $13.1 billion and Numab Therapeutics AG's atopic dermatitis drug for $1.25 billion in May.
Despite revenue growth in its medical devices segment by nearly 6%, it fell slightly short of market expectations. Wolk noted that sales in the Asia-Pacific region were impacted by a doctors' strike in South Korea. The company remains interested in "small-scale acquisitions" that provide the best value but is open to larger deals if advantageous.
