Johnson & Johnson lifted its 2014 earnings forecast for a third time on Tuesday, fueled in part by revenue gains from its new blockbuster hepatitis C treatment Olysio.
But shares of the world's biggest health care products maker slipped as investors worried about looming competition for the drug, which has already generated nearly $2 billion in global sales so far this year.
J&J's higher forecast came a couple days after the Food and Drug Administration approved Harvoni, a pill from Gilead Sciences Inc. that can cure the most common form of hepatitis C without the grueling pill-and-injection cocktail long used to treat the virus.
Analysts expect competition that includes Harvoni and another Gilead treatment, Sovaldi, to start taking bigger bites over the next few quarters out of sales for Olysio, which brought in nearly $800 million in the third quarter after being approved last November.
"I think the relative growth rate of (Johnson & Johnson) has peaked in the pharmaceutical division," said Tony Butler, an analyst for Guggenheim Securities.
Pharmaceutical sales climbed 18 percent to $8.3 billion in the third quarter, and that growth followed a 21 percent gain in the second quarter. The strong performances have helped that division regain its lead among J&J's segments over the medical device business and consumer products, which is still recovering from dozens of product recalls since 2009.
The maker of Band-Aids and baby shampoo said Olysio's performance, among other factors, prompted it to raise the 2014 forecast again. It now expects earnings adjusted for one-time items to range between $5.92 and $5.97 per share this year. That's up from a forecast it made in July for $5.85 to $5.92 per share.
Analysts have been projecting earnings of $5.92 per share, according to Zacks Investment Research.
In the third quarter, J&J earnings jumped 59 percent to $4.75 billion even though revenue only rose 5 percent to $18.47 billion. A $1.1 billion, after-tax gain from the sale of its Ortho-Clinical Diagnostics business helped results.
Earnings adjusted for one-time items totaled $1.50 per share, or 8 cents more than the average analyst expectation.
The company's stock was down 69 cents to $98.43 in midday trading, while the Dow Jones industrial average, of which J&J is a member, climbed slightly.
The drop comes after the New Brunswick, New Jersey, company's shares hit an all-time high price of $108.77 late last month, according to FactSet.
The shares are still up more than 7 percent so far this year.