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Johnson & Johnson guides to higher full-year earnings



Johnson & Johnson (J&J) guided to stronger earnings for 2023 than analysts were expecting after a year in which the pharma division suffered because of waning demand for its unpopular Covid-19 shot.
Its Covid vaccine, which falls out of favour after cases of a rare and potentially deadly blood clotting disorder, was a drag on the pharma division’s earnings last year. Sales in the drug unit were up 2.3% in the year overall. But without the Covid shot, revenue actually was up 4.3%.
It’s unclear if J&J will continue to manufacture its Covid shot in the years to come, but even so, it’s going to be reliant on other drugs to drive growth. Pharma is the company’s biggest division, delivering more than half of all sales in 2022. For the fourth quarter, pharma was the poorest performing division with reported sales contracting 7.4% to $13.16 billion, which the drugmaker attributed to the Covid-19 shot and the negative effects of the strong dollar.
Overall, adjusted earnings were $2.35 a share, compared to estimates for $2.23. Revenue of $23.7 billion was just shy of the average analyst estimate of $23.9 billion. Those quarterly sales were down 4.4% from a year earlier. J&J is in the process of splitting off its consumer division.
The company painted a rosier picture for earnings in 2023, which was encouraging for investors after Chief Executive Officer Joaquin Duato said at the JPMorgan Healthcare Conference earlier this month that he had to be cautious about 2023, citing factors such as inflation, higher costs, vaccine sales and China’s Covid situation.
The company forecast 2023 adjusted earnings of $10.45 to $10.65 a share, above analysts’ average estimate of $10.35 a share. Revenue for the year will be in the range of $96.9 billion to $97.9 billion, J&J said, while analysts had expected $98 billion.
That outlook is “encouraging,” Bloomberg Intelligence analyst John Murphy said, and “bodes well” for the entire pharma industry.
“Having seen the comments from CFO Joe Wolk that JNJ is being responsibly cautious with guidance, a major focus on the call is likely to be around what drives that caution and if margin pressure might relent later in the year,” Murphy said. Wolk spoke earlier on CNBC.

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