Johnson & Johnson, anticipating significant impact from the COVID-19 pandemic, slashed its 2020 sales forecast by billions of dollars and also cut its profit expectations.
It’s one of the first major U.S. corporations to report first-quarter earnings and likely a harbinger of things to come as the outbreak disrupts the global economy.
The world’s biggest health products maker on Tuesday said it now expects 2020 revenue of $77.5 billion to $80.5 billion, down from its January forecast of $85.4 billion to $86.2 billion. It also forecast adjusted earnings per share of $7.50 to $7.90, down from the January forecast of $9 to $9.15 per share.
J&J faces both the prospect of lower sales as much of the world stays home to avoid infection, and higher costs as it races to develop a vaccine against the new coronavirus.
“We are committed to beginning production at risk imminently and bringing an affordable and accessible vaccine to the public on a not-for-profit basis for emergency pandemic use,” Chief Executive Alex Gorsky said in a statement.
The maker of Tylenol and baby shampoo reported a very strong first quarter, with net income up 55%. But that was largely before the outbreak sent the global economy on a new tangent.
Net income was $5.8 billion, or $2.17 per share. That’s up from $3.7 billion, or $1.39 per share, in 2019′s first quarter.
Earning after adjusting for one-time items came to $6.2 billion, or $2.30 per share, which easily beat Wall Street per-share expectations of $2.03 per share.
J&J, based in New Brunswick, New Jersey, posted revenue of $20.69 billion, which also beat Street forecasts for $19.25 billion.
Total sales in the U.S. jumped 5.6% to $10.7 billion, while sales overseas edged up just 1%, to $9.99 billion.
During the quarter, sales of prescription drugs and consumer health products both were up about 9%, to $11.13 billion and $$3.63 billion, respectively.
But J&J’s medical device and diagnostics segment had revenue drop 8% to $5.93 billion.
That segment is more vulnerable to economic downturns because many of its products are for elective surgery, such as hip and knee replacements. J&J said it expected the pandemic to cause medical procedures to be postponed, hurting its surgery, orthopedics and other businesses.
Last month, J&J applied for U.S. and European Union approval of ponesimod, its experimental treatment of adults with relapsing multiple sclerosis.
Shares jumped about 3% before the opening bell.