Healthcare giant Johnson & Johnson reported quarterly earnings above Wall Street estimates and raised 2007 earnings guidance, sending shares up almost 3%.
The company reported earnings of $1.16 per share in the first quarter, excluding special items. Analysts on average expected $1.05 a share, according to Thomson Financial.
"We were particularly impressed with 2% sales rise for Procrit/Eprex, amid safety concerns and labeling changes," said Robert Gold of S&P Equity Research. "The cardiac stent franchise continues to struggle in a maturing market category with resulting decline in selling prices, but the Ethicon unit was strong."
Johnson & Johnson sells Procrit, an aneimia drug, under a long-standing license from Amgen . Both companies have been fire recently after the U.S. Food and Drug Administration imposed a "black box" warning label on March 9 on Procrit as well as Amgen's Aranesp and Epogen due to safety concerns. Procrit is marketed under the name Eprex outside of the United States.
Despite the recent setback, J&J said it is confident of delivering annual profit, excluding special items, of between between $4.02 and $4.07 a share -- eclipsing Wall Street forecasts of $3.90 a share.
J&J shares were up $1.85 at $64.87 in morning trading on the New York Stock Exchange.
Glenn Novarro, an analyst with Banc of America Securities, said the solid first-quarter performance was due to a tax rate that fell more than 2%, as sales grew across all three of J&J's product lines: prescription drugs, medical devices and consumer products.
J&J said it earned $2.6 billion, or 88 cents a share, on a net basis, compared with $3.3 billion, or $1.10 a share, in the year-earlier period. The net results included a $807 million charge related to the recent acquisition of Conor Medsystems.
Company sales rose 15.7% to $15 billion, about $500 million above Wall Street projections, helped by favorable foreign exchange factors and J&J's acquisition in December of Pfizer's line of consumer products.
Global sales of prescription drugs, which carry profit margins far higher than the company's other product lines, jumped 10.6% to $6.2 billion.
Sales of Topamax, an epilepsy treatment also used to treat migraines, jumped 30% to $610 million, while antibiotic Levaquin rose 18% to $475 million.
Combined sales of anti-psychotic drugs, including schizophrenia treatment Risperdal and a new but similar treatment called Invega, rose 16% to $1.18 billion.
Medical device sales rose 6.2% to $5.3 billion, as higher sales of contact lenses, surgical and orthopedic products were partially offset by plunging sales of its Cypher stent -- used to prop open coronary arteries that have been cleared of plaque.
Global sales of the drug-coated stent fell 27% to $530 million, amid concerns that it and rival devices can cause dangerous blood clots long after they are implanted. The company cited lower prices and "overall softness" in demand for Cypher.
Sales of consumer products jumped 49% to $3.5 billion, as the brands acquired from Pfizer were absorbed by J&J and distributed around the world.