J&J bests Q3 estimates, announces $10B buyback; Earnings dogged by strong dollar
- Johnson & Johnson reported Q3 2015 earnings on Tuesday that beat analysts' expectations. Net profit for the third quarter fell to $1.49 per share from $1.50 per share for Q3 2014, but analysts only expected $1.45 per share.
- Year-over-year Q3 gross revenues declined from $18.47 billion, to $17.1 billion. Likewise, net revenues declined from $4.75 billion to $3.36 billion.
- Continuing effects of a strong dollar contributed to the decline in overall revenues and EPS. There was a 13% decline in international sales in the context of a negative currency impact of 15.8%. Although sales of top drugs such as Remicade fell a bit below estimates, strong sales of other drugs like Invokana and Stelara (and a lower tax rate) helped the company beat profit forecasts.
The impact of a strong dollar on revenues cannot be discounted. Were it not for the strong dollar, J&J would be reporting significantly higher earnings quarter over quarter.
Although the stock was down briefly after the news, it's been pretty stable overall, and many analysts are moving J&J from the “hold” category to a “buy” recommendation.
Add to that the fact that J&J has $34 billion in cash, versus $19 billion in debt—and the company's announced planned buyback of $10 billion worth of stock—and things don't look so bad.