Johnson & Johnson posted weaker-than-expected quarterly revenue on Tuesday as sales of prescription drugs and cardiac stents disappointed, sending its shares down more than 2 percent.
While third-quarter profit topped analyst forecasts, that was largely because of cost cuts and lower taxes.
I think people would have been happier if the revenue was stronger and the beat on the bottom line was less, Noble Financial Group analyst Jan Wald said.
The company said net earnings rose 1.1 percent to $3.35 billion, or $1.20 per share, from $3.31 billion, or $1.17 per share, a year earlier. Analysts polled by Thomson Reuters I/B/E/S had forecast $1.13 per share.
Sales fell 5.3 percent to $15.08 billion, shy of the analysts' forecast of $15.22 billion. They would have fallen 2.8 percent if not for the stronger dollar, which hurts the value of overseas sales.
The company said prescription drug sales fell more than 14 percent to $5.25 billion, hurt by generic competition for its Topamax epilepsy drug and Risperdal schizophrenia treatment.
J&J's Procrit and Eprex anemia drugs continued to suffer because of safety concerns for the category, with combined sales falling 12 percent to $542 million.
Sales of arthritis drug Remicade rose almost 6 percent to $1.04 billion despite the weak global economy, which has hurt sales of costly rival treatments. Even so, Remicade growth was far from the 24 percent seen in the second quarter.
Every company these days is a revenue story -- are they able to generate sales? Wald said. It comes along with the whole macro economic view.
Medical device sales rose 2.3 percent to $5.8 billion.
But the company's Cypher stent, used to prop open heart arteries that have been cleared of plaque, continued to suffer big sales declines in the United States and overseas due to competition from similar products.
Sales of J&J's array of consumer products fell 2.7 percent to $3.99 billion, hurt by the stronger dollar, although it was less of a drag than in the second quarter.
J&J, one of the world's largest and most diversified healthcare companies, has a long reputation of meeting profit forecasts even in tough times because of its ability to wring cost savings from its hundreds of subsidiaries.
The company forecast 2009 earnings of $4.54 to $4.59 per share, excluding items. It previously projected $4.45 to $4.55.
J&J shares fell 2.5 percent to $60.99 in trading before the market opened.
(Reporting by Ransdell Pierson and Lewis Krauskopf, editing by Gerald E. McCormick and Lisa Von Ahn)