J&J Posts Earnings Beat

Both fourth-quarter and year-end profit and sales exceed estimates.
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Johnson & Johnson's

(JNJ) - Get Report

quarterly and year-end earnings beat Wall Street expectations, as stronger international sales and a favorable currency impact helped to offset a decline in sales of certain products.

Shares of the New Brunswick, N.J.-based pharmaceutical and medical device company declined $1.46, or 2.2%, to $64.83 in recent trading Tuesday morning.

Johnson & Johnson said quarterly sales increased 16.6% year over year to $16 billion, bringing the total to $61.1 billion for the year, while the Street was looking for revenue of $15.4 billion and $60.55 billion, respectively.

The company reported earning $2.4 billion, or 82 cents a share, for the fourth quarter -- $2.5 billion, and 88 cents a share, before items, while analysts surveyed by Thomson Financial anticipated 86 cents a share.

For the year, Johnson & Johnson reported earnings of $10.6 billion, or $3.63 a share, decreases of 4.3% and 2.7%, respectively. Excluding items, the company recorded $12.1 billion, or $4.15 a share, vs. the Thomson Financial consensus target of $4.13 a share.

A positive currency impact of 10.5% helped fourth-quarter international sales achieve an increase of 25.8% year over year. Currency contributed 4.7% of overall sales growth for the fourth quarter.

Annual medical and diagnostics sales increased 7.2%, to $21.7 billion in 2007 vs. 2006, and pharmaceutical sales increased 6.9%, to $24.9 billion in 2007. Pharmaceutical sales were bolstered by antipsychotics Risperdal and Consta and recently launched Invega, migraine treatment Topamax, biologic Remicade, multiple myeloma drug Velcade, attention deficit hyperactivity disorder drug Concerta and Levaquin, an anti-infective.

However, quarterly sales of Johnson & Johnson's Cypher stent fell 31% to $415 million, year over year, impacted by competition and safety concerns surrounding the devices, which are used to prop open clogged arteries. And sales of the company's anemia drug Procrit floundered as a result of reimbursement changes from the Centers for Medicare and Medicaid Services, falling 13% between the third and fourth quarters of 2007 alone.

Annual net earnings included an $807 million charge for in-process research and development, and a $528 million charge for restructuring, in addition to a $441 million writedown related to congestive-heart failure therapy Natrecor. The company also recorded an after-tax gain of $368 million related to the termination of the Guidant acquisition agreement.

Looking ahead, Johnson & Johnson is looking for $4.38 to $4.44 a share in 2008, while analysts are eyeing $4.42 a share.