Diagnosis: JNJ A-OK

Health-care giant Johnson & Johnson (NYSE: JNJ  ) hand-delivered a dose of effective painkiller medication this morning to investors sorely in need of some immediate relief. The maker of Tylenol (among other things) reported first-quarter results that easily topped analysts' expectations. The news, taken along with a benign inflation report, helped ease the symptoms of poor Mr. Market, who's been feeling under the weather lately. For the quarter, earnings advanced 17% to $0.97, and revenues climbed 11% to $12.8 billion.

Some know Johnson & Johnson best for its baby-care products, Band-Aid bandages, Aveeno skin lotion, and other consumer brands. Others associate the company with drug-coated stents, surgical devices, and medical diagnostic equipment. Finally, some think of it as a well-known pharmaceutical company that has developed drugs like Procrit, Remicade, and a host of others designed to treat a broad range of ailments. Actually, with more than 200 distinct operating companies, Johnson & Johnson is a leader in each of these areas -- and all three contributed to this morning's robust top-line growth.

During the quarter, worldwide sales of consumer products rose 11.4%, driven by a solid 20.7% jump overseas. Growth in the segment was paced by solid gains in over-the-counter Tylenol, as well as Aveeno skin-care products. Artificial sweetener Splenda, whose market share has topped 50%, also reported healthy sales.

Most of the attention lately, though, has been focused squarely on the war over drug-coated stents -- tiny devices that prop open the arteries during heart surgery. Johnson & Johnson was the first to enter the market two years ago this month. Despite a one-year head start, though, rival BostonScientific's (NYSE: BSX  ) competing Taxus stent gained ground quickly, and it now controls 60% of the $4 billion market. Johnson & Johnson's Cypher has the edge in foreign markets, though -- particularly in Japan, where it has no competition. While these two heavyweights slug it out toe-to-toe, Medtronic (NYSE: MDT  ) is eagerly making plans to enter the fray.

With the competition heating up, Cypher's first-quarter sales plunged 27% to $317 million. Nevertheless, it did show a sequential improvement from fourth-quarter revenues of $307 million, and the Cordis unit, which markets Cypher, posted overall growth of 10%, fueled by a 72% leap in international sales. Furthermore, the six other units comprising the medical devices and diagnostic division each reported revenue growth of better than 15%, pushing sales in the segment 16% higher to $4.8 billion.

Sales in the pharmaceutical segment -- Johnson & Johnson's largest -- came in 7% higher on mixed results. Epilepsy drug Topamax and rheumatoid arthritis treatment Remicade were the standouts -- each reporting sales gains of 24%. Those gains were partially offset, though, by a 1% drop in sales of pain-relief patch Duragesic, which is trying to fend off generic competition. Anemia treatment Procrit sales were also disappointing, particularly in the U.S., where they fell 18%. Still, the results stack up well next to Pfizer (NYSE: PFE  ) , whose first-quarter net income dropped 87% in the wake of well-publicized problems with high-profile drugs Bextra and Celebrex.

Last March, Chief Motley Fool Income Investor Matthew Emmert presented his case for Johnson & Johnson. How has it done since? In the past year, the stock has raced to its 20th straight year of double-digit earnings growth, boosted dividends for the 40th year in a row, expanded gross margins to a phenomenal 73%, and delivered a 28% return for shareholders. That kind of portfolio medicine tastes good in any flavor.

Do dividends make your day? Take a free, 30-day trial toMotley Fool Income Investorfor all sorts of investment ideas with a focus on dividends.

Fool contributor Nathan Slaughter owns none of the companies mentioned.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 491599, ~/Articles/ArticleHandler.aspx, 9/3/2014 1:10:59 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 3 hours ago Sponsored by:
DOW 17,067.56 -30.89 -0.18%
S&P 500 2,002.28 -1.09 -0.05%
NASD 4,598.19 17.92 0.39%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/2/2014 4:00 PM
BSX $12.59 Down -0.09 -0.71%
Boston Scientific… CAPS Rating: ***
JNJ $103.36 Down -0.37 -0.36%
Johnson & Johnson CAPS Rating: ****
MDT $63.91 Up +0.06 +0.09%
Medtronic CAPS Rating: *****
PFE $29.26 Down -0.13 -0.44%
Pfizer CAPS Rating: ****