MW Johnson & Johnson's stock surges as tariff cost estimate slashed and profit outlook raised
By Tomi Kilgore and James Rogers
Johnson & Johnson expects 'elevated growth' in the second half of the year, according to CEO Joaquin Duato
Johnson & Johnson has slashed on Wednesday its estimate for the impact of tariffs in 2025, which it now expects to be around $200 million.
The company's stock $(JNJ)$ is climbing in morning trading, boosted by better-than-expected second-quarter results and raised outlook, amid strength in sales of cancer treatments and heart-health monitoring products.
Chief Financial Officer Joe Wolk provided the new tariff-cost estimate, which is half the company's prior estimate, during a conference call to discuss the company's second-quarter results Wednesday.
"During our first-quarter conference call, we anticipated an impact from tariffs in 2025 to be approximately $400 million based on the current tariff landscape," he said, according to a FactSet transcript. "We now anticipate the impact to be approximately $200 million exclusively related to our MedTech business."
Wolk said the company will look to reinvest the difference into its drug pipeline and the launch of new products.
Johnson & Johnson's Chief Executive Joaquin Duato also praised the Trump administration's new tax policies, as Trump has threatened high tariffs on imported pharmaceuticals.
"It's hard to know what is going to happen ultimately with tariffs, but what we do know for sure is that the tax policies that just passed are already creating American jobs and driving innovation," Duato said.
The CEO highlighted Johnson & Johnson's plan, which it announced earlier this year, to invest more than $55 billion in the U.S. over the next four years toward manufacturing, research and technology. The company's goal, he said, is to be able to manufacture in the U.S. all the medicines that are consumed in the country. "We are on our way of being able to do that," Duato added.
Shares of Johnson & Johnson climbed 4.5% in morning trading, enough to pace the S&P 500 index's SPX gainers. They were also headed for the biggest one-day gain since they rallied 4.6% on May 1, 2024.
The latest quarter was the second straight in which Johnson & Johnson raised its full-year sales outlook, casting a positive glow on the broader pharmaceutical sector.
Shares of rival Pfizer Inc. $(PFE.AU)$ were up 1%, Eli Lilly & Co. shares (LLY) advanced 1.6% and Merck & Co. Inc.'s stock $(MRK.UK)$ was up 0.6%.
For the quarter to June 29, J&J's adjusted earnings per share fell to $2.77 from $2.82 in the same period a year ago, and topped the average analyst EPS estimate compiled by FactSet of $2.68.
Sales grew 5.8% to $23.74 billion, above the FactSet consensus of $22.85 billion. U.S. sales grew 7.8% to $13.54 billion, above the FactSet consensus estimate of $13.06 billion. International sales rose 3.2% to $10.2 billion. Analysts surveyed by FactSet were looking for international sales of $9.75 billion.
By segment, innovative-medicines sales rose 4.9% to $15.2 billion and medtech sales increased 7.3% to $8.54 billion.
During the conference call, Duato said the company expects "elevated growth" in the second half of the year. In a statement, the CEO cited anticipated approvals and submissions in areas such as lung and bladder cancer, major depressive disorder, psoriasis, surgery and cardiovascular.
For the full year, the company lifted its outlook for adjusted EPS to between $10.80 and $10.90 from the previous range of between $10.50 and $10.70, and boosted its guidance range for sales to $93.2 billion to $93.6 billion from $91 billion to $91.8 billion. Analysts surveyed by FactSet are looking for full-year adjusted earnings of $10.64 a share and sales of $91.43 billion.
During the conference call, CFO Wolk said that the company's guidance does not include the impact of the most favored nation concept. Earlier this year, President Donald Trump signed an executive order instituting a "most favored nation" policy that aims to slash prices of prescription-drug prices by ensuring the U.S. pays the same price as the nation that pays the lowest price anywhere in the world.
"We share the administration's goal that American patients should pay less by addressing the real drivers of higher U.S. costs, including middlemen, driving up prices and foreign markets not paying their fair share," said Wolk.
In a separate announcement, Johnson & Johnson announced a quarterly dividend of $1.30 a share, maintaining the payment at the same level as the dividend announced in April. Shareholders of record on Aug. 26 will be paid the new dividend on Sept. 9. At current prices, the annual dividend rate implies a dividend yield of 3.21%, compared with the implied yield for the S&P 500 of 1.24%.
The stock has gained 12.8% in 2025, while the Health Care Select Sector SPDR ETF XLV had declined 3% and the S&P 500 index SPX has gained 6.1%.
-Tomi Kilgore -James Rogers
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July 16, 2025 10:21 ET (14:21 GMT)
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