Johnson & Johnson Beats Earnings Estimates Despite Light Revenues

This morning Johnson & Johnson, Inc. (JNJ) reported financial results for the first quarter ending March 31, 2009.

Revenue for the quarter came in at $15.0 billion, about $521 million below our forecast and down 7.2% from the same period in 2008. Revenue was negatively impacted by 6% due to foreign exchange, while operational results fell by 1.2%. Consumer, Pharmaceutical and Medical Devices sales contracted by 8.7%, 10.1% and 2.9%, respectively, compared to the same period in 2008.

Consumer sales fell 1.0% operationally and 7.7% due to foreign exchange. Strong sales of Listerine, Neutrogena and Aveeno were offset by significant weakness in the OTC/Nutritionals segment. Pharmaceutical division sales fell 5.0% operationally and 5.1% due to foreign exchange.

Pharmaceutical results were largely inline with our expectations, with Concerta posting strong year-over-year growth while Risperdal and Procrit sales fell at an accelerated rate in the period. Medical Devices sales grew 3.1% operationally which was more than offset by 6.0% due to foreign exchange. Medical Devices results were impacted by significantly softer sales of diabetes/glucose monitoring test strips as consumers cut back on out-of-pocket purchases.

Despite the revenue shortfall, EPS on an adjusted basis was $1.26, compared to our forecast of $1.20. Earnings exceeded expectations due to significantly lower than forecasted SG&A and R&D spend in the quarter a well as stronger gross margin due to the affects of foreign exchange.

Management affirmed previously issued full-year 2009 EPS guidance of $4.45 - $4.55, excluding special items.

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