J&J slashes outlook, races to develop coronavirus vaccine

Johnson & Johnson, anticipating significant impact from the COVID-19 pandemic, slashed its 2020 sales forecast by billions of dollars and cut its profit expectations by about 15%.

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.

Despite that, the company increased its quarterly stock dividend, for the 58th consecutive year, from 95 cents to $1.01 per share.

Investors seemed reassured, driving shares up $7.24, or 5.2%, to $147.01 in morning trading.

J&J faces both the prospect of lower sales as much of the world stays home to avoid infection, and higher costs as the company races to develop a vaccine against the new coronavirus.

“We are committed to beginning production ... 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.

On a conference call with analysts, executives said they expect the worst impact this quarter, with recovery starting toward year-end.

The company is aiming to have its single-dose vaccine candidate available for broad use early in 2021, and also is testing two backup vaccine candidates. J&J has a good track record on vaccines, developing ones for HIV, Ebola and the Zika virus over the last decade.

“The vaccine is our biggest focus,” Chief Financial Officer Joe Wolk said in an interview.