UPDATE 4-J&J results top views but forecast weighs

* Q4 EPS ex-items $1.02 vs 97-cent estimate

* Sees 2010 EPS $4.85-$4.95

* Shares down 0.8 pct after falling 1.6 pct earlier in day
(Adds analyst comment, updates shares)

By Ransdell Pierson and Lewis Krauskopf

NEW YORK, Jan 26 (BestGrowthStock) – Johnson & Johnson (JNJ.N: )
reported better-than-expected quarterly sales and earnings,
helped by sharply lower taxes and a return to growth for its
array of medicines, medical devices and consumer products.

But the diversified healthcare company, which is
traditionally conservative in its outlook, predicted 2010
earnings would rise about 5 to 7 percent — barely reaching
Wall Street projections. Its shares were down 0.8 percent on
Tuesday afternoon after falling as much as 1.6 percent earlier
in the day.

Morgan Stanley analyst David Lewis called the 2010 forecast
“somewhat disappointing.”

“J&J must aggressively reinvest in the business to drive
revenue growth, offset the impact of recent acquisitions and
contend with economic and broader healthcare pricing
pressures,” Lewis said in a research note.

The company said fourth-quarter profit (Read more your timing to make a profit.) fell to $2.2
billion, or 79 cents per share, compared with $2.71 billion, or
97 cents per share, in the year-ago period.

Excluding special items, including an $852 million
restructuring charge, J&J earned $1.02 per share. Analysts on
average had expected 97 cents per share, according to Thomson
Reuters I/B/E/S.

Company sales rose 9 percent to $16.55 billion, well above
analyst predictions of $15.7 billion, helped by a recovering
economy and newer products. By contrast, third-quarter sales
fell 5.3 percent, hurt by generic competition for the company’s
Risperdal schizophrenia drug.

“Sales beat our expectations across all three divisions,”
Leerink Swann analyst Rick Wise said, with fourth-quarter
growth more than double his projections.

Company Chief Executive William Weldon said 2009 was the
first year in 76 years that J&J failed to report sales growth.
But the company predicted a return to sales growth this year.

“We already are seeing promising signs we are driving
significant growth and capitalizing on the investments we’ve
made,” Weldon told analysts in a conference call.

Another diversified health company, Swiss-based Novartis AG
(NOVN.VX: ), reported a 54 percent rise in fourth-quarter net
profit, helped by sales of H1N1 swine flu vaccines. It also
named drugs head Joe Jimenez as CEO, replacing longtime chief
Daniel Vasella. [ID:nLDE60P0RD]

J&J’s fourth-quarter pharmaceutical division sales rose 5.4
percent to $5.99 billion, medical device and diagnostic unit
sales increased 11.8 percent to $6.31 billion and consumer
product sales rose 10.2 percent to $4.25 billion.

The earnings beat in the quarter was due in part to an
extra week of sales in the calendar year, as well as sharply
lower taxes, the company said. The tax rate in the quarter, of
15.3 percent, was well below the 22.8 percent rate in the
year-ago period.

J&J predicted a full-year 2010 profit of $4.85 to $4.95 per
share excluding items. Analysts have expected $4.94 per share.

J&J’s profit jumped almost 10 percent in 2008, but grew
only 1.8 percent last year as the recession crimped sales of
many products and generic competition took its toll.

The company expects earnings to rise as much as 7 percent
this year — helped by novel products such as its recently
approved Stelara psoriasis drug.

J&J shares were down 0.8 percent at $62.71 on the New York
Stock Exchange, off an earlier low at $62.22.

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(Reporting by Ransdell Pierson and Lewis Krauskopf, editing by
Gerald E. McCormick, Dave Zimmerman and Matthew Lewis)

UPDATE 4-J&J results top views but forecast weighs