J&J profit beats forecasts, helped by lower taxes, cost cuts

Tue Jan 26, 2016 4:47pm EST
 
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By Ransdell Pierson

(Reuters) - Johnson & Johnson (JNJ.N: Quote) on Tuesday reported higher-than-expected quarterly earnings, helped by cost cuts and lower taxes, and gave a 2016 profit outlook slightly above Wall Street's.

Shares of the diversified healthcare company rose almost 5 percent to $101.18 as investors shrugged off fourth-quarter sales and a 2016 revenue outlook that were both below analysts' estimates.

Edward Jones analyst Ashtyn Evans said investors were cheered by J&J's vow to make more of its medical devices market leaders and to launch 30 new devices this year, including a new insulin pump.

"It's an optimistic outlook, but the market is reacting to that," said Evans, who noted that company devices in recent quarters have been the company's slowest-growing business. Device sales fell 3.3 percent to $6.43 billion in the fourth quarter.

J&J last week said it would cut about 3,000 jobs within the struggling unit over the next two years to generate annual cost savings of up to $1 billion and to focus on priority areas like artificial knees and devices for trauma surgery.

The strong U.S. dollar, which hurts the value of sales outside the United States, weighed heavily on J&J's fourth quarter results, and analysts said J&J would probably rely on more cost cuts in 2016 to meet its profit forecast.

The company said it expects earnings of $6.43 to $6.58 per share for 2016, excluding special items.

Wall Street analysts forecast earnings of $6.38 per share.   Continued...

 
Bottles of Johnson & Johnson baby lotion line a drugstore shelf in New York October 15, 2015.  REUTERS/Lucas Jackson