J&J Q3 Earnings Beat Expectations, Talc Liabilities Advance | world news

Adjusted earnings were $2.42 per share, beating Wall Street's average estimate of $2.19. Pharmaceutical revenue increased nearly 5%, exceeding expectations by more than $400 million, with sales of myeloma treatment Darzalex increasing more than 20%.

Joe Wolk, J&J's chief financial officer, said the results put the company “in a good position to finish the year strong.”

Stocks in New York fell 0.1 percent. They gained 3.1 percent this year through Monday's close.

J&J has made progress in resolving lawsuits related to talc in its legacy products, a persistent drag on investor sentiment. In September, 83 percent of claimants accepted his settlement offer of about $8 billion. In a favorable legal ruling this month, a federal bankruptcy judge in Texas said he would let a J&J subsidiary address the talc issue in his court, helping the company avoid a New Jersey appeals court that previously ruled against it.

Orientation cut

During the quarter, J&J said it would pay up to $1.7 billion for V-Wave Ltd., which is developing an implantable device for heart failure. The company lowered its 2024 adjusted earnings guidance for the year to $9.88 to $9.98 per share, down from previous guidance of $9.97 per share. J&J blamed the forecast cut for the deal.

As Bloomberg Intelligence says:

Johnson & Johnson's 10-cent midpoint adjusted EPS growth gave it a 24-cent outperformance in Q3, but signaled caution about flagship product Stellara, for which it expects a biosimilar in the U.S. in January, likely leading to the wholesaler's inventory reduction in the 4Q. There was a 1% drop in sales as the pharmaceutical unit was 3% better and devices were 2% lighter, but the 11% drop in Q3 adjusted earnings per share was largely related to litigation revenue, the as R&D spending increased.

— John Murphy, pharmaceutical analyst at BI. Read the research here.

Last year, J&J spun off its consumer health division from Kenview Inc. manufacturing, allowing it to focus on the more profitable segments of prescription drugs and medical devices. Since then, J&J has made numerous acquisitions, including a $13.1 billion purchase of cardiac device maker Shockwave Medical and a $1.25 billion deal in May for an atopic dermatitis drug from Numab Therapeutics AG.

While revenue from Shockwave and other acquisitions helped J&J's medical device revenue grow about 6%, it was slightly below estimates. Sales in Asia-Pacific were hurt by the doctors' strike in South Korea, Wolk noted.

J&J is still looking for “small deals” that offer the best value, Walk said in an interview, although the company remains open to larger acquisitions. “We have an appetite, but it’s not something we’re going to expand.”