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Johnson & Johnson Stock Gains After Unveiling $5 Billion Buyback Program, Repeating Profit Targets

"We have the ability to invest in innovation, grow our dividend, execute strategic acquisitions, and take this action to deliver shareholder returns," said CEO Joaquin Duato.

Updated at 12:14 pm EST

Johnson & Johnson  (JNJ) - Get Free Report shares moved higher Wednesday after the healthcare and pharmaceutical group unveiled a new $5 billion share buyback program and reaffirmed its full-year profit targets.

Johnson & Johnson said the buyback plan, which will be funded by cash, will have no time limit and will target the group's 2.63 billion in outstanding common stock.

The company also reiterated its 2022 earnings forecast of between $10.65 and $10.75 per share, with adjusted operational sales growth of between 6.5% and 7.5%.

“The last few years have demonstrated the resilience of Johnson & Johnson. With continued confidence in our business and pipeline, the Board of Directors and management team believe that Company shares are an attractive investment opportunity,” said CEO Joaquin Duato. “With our strong cash flow and lowest level of net debt in five years, we have the ability to invest in innovation, grow our dividend, execute strategic acquisitions, and take this action to deliver shareholder returns and drive long-term growth.”  

Johnson & Johnson shares were marked 1.88% higher in mid-day Wednesday trading to change hands at $164.40 each.

Johnson & Johnson posted better-than-expected second quarter earnings in late July but trimmed its full year sales and profit forecasts owing to the impact of a stronger U.S. dollar.

Pharmaceuticals sales were up 6.7% to $13.332 billion while Covid vaccine sales, Johnson & Johnson said, more than doubled from last year to $544 million.

Looking into the 2022 financial year, Johnson & Johnson trimmed its forecast for adjusted earnings to between $10.00 to $10.10 per share, down 25 cents from the higher end of its prior forecast, with sales in the region of $93.3 to $94.3 billion.

That's down from its previous estimate of $94.8 billion to $95.8 billion, although that tally included vaccine sales. 

Last month, Johnson & Johnson also said said it would completely halt the sale of its iconic talc-based baby powder products next year.

Johnson & Johnson, which faces around 38,000 lawsuits centered around links to cancer-causing asbestos found in the talc-based product , stopped selling Baby Powder in the U.S. and Canada in 2020. The group, which began selling talc-based Baby Powder in 1894, said late Thursday that it will transition to "an all cornstarch-based baby powder portfolio" starting in 2023.

Late last year, Johnson & Johnson noted that costs linked to defending cases linked to allegations that its Baby Powder, and other talc-based products, contained cancer-causing asbestos are close to $1 billion. Another $3.5 billion has been tied to previous verdicts and settlements.