July 20 (Reuters) - Johnson & Johnson forecast 2023 profit above Wall Street estimates on Thursday, banking on strong demand for its cancer drugs and a recovery in sales of its medical devices due to an uptick in surgical procedures such as hip and knee replacements.
Shares of J&J rose about 1% in premarket trading.
Chief Financial Officer Joseph Wolk said the company felt confident enough to raise its full-year outlook because of growth across the business.
"We beat expectations on the guidance we gave in January for the full year, but we qualified it to be responsibly cautious," Wolk said in an interview. "The qualifiers are now off, and if you look across our entire portfolio, just strength across the board."
He added that despite concerns in the last quarter, inflation had stayed about the same.
J&J has placed huge bets on its newer cancer drugs, while trying to bolster growth at its pandemic-hit medical devices business, as it looks to counter a potential slowdown in sales of its blockbuster Stelara arthritis drug, which faces the threat of competition in 2025.
Wolk told Reuters that J&J's patent litigation settlement with Amgen over Stelara, which delayed biosimilar competition for the drug until 2025, gave the company more confidence about hitting its target of $57 billion in pharmaceuticals sales by 2025.
J&J, which took a hit from delayed surgeries and hospital staffing shortages during the pandemic, said the volume of procedures and staffing levels were expected to be "stable" for the rest of the year.
The company expects sales at its pharmaceutical unit to grow more in the second half of 2023, compared with the first half.
Quarterly sales of its multiple myeloma drug, Darzalex, were $2.43 billion, in line with Wall Street estimates, according to Refinitiv data.
Stelara also met expectations with sales of $2.8 billion in the quarter.
Second-quarter sales for the company's medical device unit were $7.79 billion, topping estimates of $7.55 billion.
J&J said it now expects adjusted 2023 profit of $10.70 to $10.80 per share, above estimates of $10.65 per share and its prior forecast of $10.60 to $10.70 per share.
The drugmaker also posted better-than-expected second-quarter earnings of $2.80 per share, compared with analysts' expectations of $2.62.
J&J's said it plans to "split off" the shares that it currently holds of its consumer health unit, Kenvue (KVUE.N), through an exchange offer as part of its separation plan.
"We like that from the J&J perspective, because it effectively enables us without a significant cash outlay to potentially acquire a number of shares," said Wolk.
The company currently holds about 90% stake in Kenvue, according to Refinitiv.
Reporting by Bhanvi Satija in Bengaluru and Patrick Wingrove in New York; Editing by Anil D'Silva and Mike Harrison
Source: Reuters