Johnson & Johnson
What's going on? As best I can tell, investors seem a little anxious about the revenue number. Sales came in just under analysts' expectations, and more than half of the 6.8% year-over-year increase in revenue came from changes in exchange rates, which boost international sales but can't exactly be counted on. Stateside sales were actually down 3.7%.
While I'll agree that revenue is important, beating on earnings with "weak" revenue isn't that bad for a conglomerate like Johnson & Johnson. By definition, it means net margins came in better than analysts were expecting. Expanding margins has been Johnson & Johnson's shtick for much of its 125-year existence.
The declining sales in the U.S. aren't something to fret about, either. Sales of consumer products were down 4.5% as Johnson & Johnson continues to get back on its feet after the marathon of recalls. It remains to be seen how much market share Johnson & Johnson will be able to recoup from over-the-counter generics manufactured by Perrigo
Sales of U.S. pharmaceutical products slipped even more, down 6.1%, but that was entirely because of new generic competition for its antibiotic Levaquin. If sales of the drug had remained constant, overall U.S. sales would have been up 2.5%. Again, this too shall pass in a few quarters.
And Johnson & Johnson has plenty to be excited about in the pharmaceutical arena. It recently launched prostate cancer treatment Zytiga, which is rumored to be competing with Dendreon's
Sure, it wasn't the company's best quarter ever, but with a solid dividend, Johnson & Johnson looks like a decent long-term investment for those willing to wait for a turnaround.
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Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Johnson & Johnson and Dendreon. Motley Fool newsletter services have recommended buying shares of Johnson & Johnson, Vertex Pharmaceuticals, and Pfizer, as well as creating a diagonal call position in Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.