Johnson & Johnson's board of directors have authorised the repurchase of up to $10 billion of the company's common stock.
The share buyback programme is “consistent with our strategy of providing value to our shareholders while maintaining flexibility to continue to invest in future growth opportunities," said J&J chief executive William Weldon. The company noted in a statement that the authorisation has no time limit and could be suspended at any time, adding that it had approximately 2.8 billion shares outstanding as of April 29.
J&J said that it will finance the stock buyback through a combination of cash and debt and management will give further details on the programme during its second-quarter earnings conference call on July 17. Following the announcement, Moody's Investors Service affirmed J&J's triple-A credit long-term debt and Prime-1 short-term debt ratings, noting that the healthcare giant’s rating outlook remains stable.
"J&J's financial policies have clearly become more aggressive, stemming from a pressure to sustain growth rates," said Michael Levesque, a senior vice president for the broker, though these “have not yet reached a point that is inconsistent with a Moody's Aaa rating".
The news went down well with the investment community and Cowen & Co's Sara Michelmore noted that "while the buyback does not have a major financial impact, we do view this as a positive use of cash at the current price and do not expect it would preclude the company from any major strategic activity, ie acquisitions”.