What’s Going On Here?

Global healthcare and consumer products giant Johnson & Johnson (J&J) Suda-fed investors with fourth-quarter sales that fell short of expectations.

What Does This Mean?

• J&J’s global sales across 2019 ended essentially flat on the year before.
  • While pharmaceuticals revenue climbed almost 4%, this was largely offset by a similar decline in medical device sales.
  • Even J&J’s large consumer business (Neutrogena beauty products and Tylenol painkillers) couldn’t save the day: sales of those products barely budged last year compared to 2018.
• The company seems more optimistic about this year, telling investors it expects 4-5% sales growth in 2020,
  • despite the increasing threat posed by generic unbranded drugs to its pharmaceutical business, which represents half of total revenue.
  • But there’s another catch: that sales growth depends on J&J’s current legal headaches getting resolved favorably.

Why Should I Care?

For you personally: Defensive pass interference.

• Investors are attracted to the “defensive” qualities of companies like J&J:
  • even if the economy heads south, sales of their essential products should stay resilient.
  • But J&J is facing thousands of lawsuits covering everything from potentially carcinogenic talcum powder to potentially carcinogenic Tylenol…

Zooming out: Abbott and beyond.

• While J&J’s share price fell, healthcare investors did have one reason to rejoice: fellow US pharmaceutical and medical device giant Abbott Labs saw its stock rise after reporting quarterly sales ahead of investors’ expectations, and forecast continuing momentum this year.
• Investors also liked the sound of that Abbott increased its dividend last month by 12.5%, marking the 48th consecutive year of dividend growth.

Content source: Finimize. (2020) Washout. Available from: https://www.finimize.com/wp/news/washout/ [Accessed 23 January, 2020]