Pharma Insight

Monday, October 16, 2006

Diversified health care products maker Johnson & Johnson reports earnings for the fiscal third quarter on Tuesday. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: In the third quarter, analysts started curtailing sales estimates for drug-coated stents as studies began circulating showing the devices raised the risk of blood clots. Also, in late September, J&J sued Boston Scientific and Abbott Labs for $5.5 billion in damages, alleging that acquisition target Guidant leaked confidential information during a bidding war that J&J eventually lost.

EXPECTATIONS: J&J forecast that third-quarter earnings should not exceed 93 cents per share, and analysts surveyed by Thomson Financial estimate earnings per share of 93 cents on revenue of $13.08 billion.

ANALYST TAKE: Banc of America analyst Glenn Novarro expects earnings per share of 95 cents on sales of $13 billion with slightly stronger drug sales of $5.7 billion watered down by weaker-than-expected stent sales. Prudential Equity's Larry Biegelsen figures the company will reach the consensus of 93 cents per share with sales of $12.94 billion.

WHAT'S AHEAD: Wall Street will continue to look for updates as J&J integrates the $16.6 billion acquisition of Pfizer's consumer products business. Also, upcoming medical conferences and an FDA panel on drug-coated stents are expected to keep pressure on sales of the devices because of raised safety concerns.

STOCK PERFORMANCE: Shares of J&J rose 8 percent over the third quarter to close at $64.94. Shares are also up about 8 percent for the year.

posted by pharma-insight @ 8:51 PM

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