To The Moon

$Johnson & Johnson(JNJ)$ is scheduled to announce its fiscal Q2 2025 earnings on Wednesday, 16 July 2025, before market open. Investors will be closely watching this report as JNJ navigates significant headwinds and leverages its diversified portfolio.

Earnings per Share (EPS): The Zacks Consensus Estimate for Q2 2025 EPS is around $2.66 to $2.68, representing a potential year-over-year decline of 5.7% to 6.4%. However, there has been a slight upward revision (0.5% to 0.7%) in the consensus EPS estimate over the last 30 days, suggesting a cautious optimism among analysts.

Revenues: Analysts project revenues of approximately $22.79 billion to $22.87 billion, which would signify a modest year-over-year increase of around 1.5% to 1.9%.

Johnson & Johnson (JNJ) Last Earnings Call for Q1 2025

The earnings call reflects a strong start to 2025 for Johnson & Johnson, driven by robust sales growth in innovative medicine and MedTech, significant oncology advancements, and strategic investments. However, challenges such as the decline in STELARA sales, tariff impacts, and orthopedics disruptions pose headwinds.

Johnson & Johnson (JNJ) Guidance

During the Johnson & Johnson First Quarter 2025 Earnings Conference Call, the company provided guidance and reported financial metrics reflecting strong operational sales growth of 4.2% across its business sectors. The innovative medicine segment saw a 4.2% sales increase despite an 810 basis points headwind from the loss of exclusivity on STELARA. Key brands, including DARZALEX, Tremfya, and Ribrofant plus LASCRUZ, showcased robust growth, with DARZALEX exceeding $3 billion in sales and Tremfya achieving 20% growth due to its new indications.

The MedTech segment also reported a 4.1% sales increase, driven by strategic acquisitions such as Abiomed and Shockwave. The company raised its operational sales guidance for the full year to reflect the addition of Caplyta, projecting operational sales growth between 3.3% and 4.3%. This guidance incorporates a positive foreign currency impact, resulting in a full-year headwind of $600 million. Johnson & Johnson maintained its adjusted reported earnings per share guidance of $10.50 to $10.70, representing a 6.2% increase at the midpoint, despite challenges such as tariffs and biosimilar competition. The call underscored the company's commitment to innovation, highlighting plans for significant investments in R&D and manufacturing.

Segment-Specific Projections & Key Factors

Innovative Medicine (Pharmaceuticals): This segment is expected to be the primary growth driver, but it faces significant challenges.

Stelara Loss of Exclusivity (LOE): This is the most significant headwind for JNJ in 2025. Several biosimilar versions of Stelara have launched in the U.S. this year. The LOE negatively impacted revenue growth by 470 basis points in Q1 2025, and this impact is expected to be even steeper in Q2. Consensus estimates for Stelara sales are around $1.88 billion, a substantial decline from prior peak levels.

Growth Drivers: To offset Stelara's decline, JNJ is heavily relying on its newer, high-growth therapies:

Darzalex (Oncology): Expected to continue its strong performance, driven by market growth and share gains in multiple myeloma.

Tremfya (Immunology): Anticipated to see increased sales due to strong market growth, share gains, and expanded approvals, including for Crohn's disease.

Carvykti (Oncology): This CAR-T therapy for multiple myeloma is a key growth product, with sales expected to surge significantly.

Spravato (Neuroscience): Continues to contribute to growth in treatment-resistant depression.

Other New Drugs: Products like Tecvayli, Talvey, and Imaavy (recently FDA-approved for generalized myasthenia gravis) are also expected to contribute to top-line growth.

Part D Redesign Impact: The negative impact of the Part D redesign is expected to weigh on some drugs like Uptravi, Erleada, and Tremfya, partially offsetting gains from market growth.

Acquisitions: The acquisition of Intra-Cellular Therapies and its antipsychotic drug CAPLYTA is a strategic move to strengthen JNJ's CNS disorder offerings, with CAPLYTA expected to reach substantial peak sales.

MedTech (Medical Devices):

Overall Growth: The MedTech segment is projected to show modest growth, with consensus estimates around $8.25 billion to $8.31 billion, representing a year-over-year increase of about 3.7%.

Acquisition Benefits: The newly acquired cardiovascular businesses, Abiomed and Shockwave, are expected to be strong contributors to growth in this segment.

Headwinds in Asia Pacific (China): Sales in China continue to be impacted by the volume-based procurement (VBP) program and anti-corruption campaigns. JNJ does not anticipate an improvement in this region for the remainder of 2025.

Competitive Pressure: Some MedTech businesses, like U.S. electrophysiology for PFA ablation catheters, are facing continued competitive pressure.

Restructuring Programs: Benefits from restructuring programs in Orthopedics and Surgery are more likely to be seen in the second half of 2025.

Tariff-related Costs: JNJ had previously estimated tariff-related costs of approximately $400 million for 2025, mainly from China, primarily impacting its MedTech business. An update on this is expected during the Q2 conference call.

Other Important Considerations:

Talc-related Lawsuits: Ongoing talc litigation remains a financial and reputational concern. While JNJ has set aside reserves, the total liabilities could be higher. Investors will be looking for any updates or developments on this front.

R&D and Commercial Investment: JNJ's continued investment in its pipeline and commercialization efforts, particularly earlier in the year, is expected to support future growth but could also impact short-term margins.

Full-Year 2025 Guidance: The company raised its full-year 2025 revenue guidance in Q1, and investors will be keen to hear any updates or reaffirmations of this guidance, particularly in light of the evolving biosimilar and tariff impacts.

"Catalyst Year" (2025): JNJ has positioned 2025 as a "catalyst year" for accelerating growth in the second half of the decade, with operational sales growth in both Innovative Medicine and MedTech segments expected to be higher in the second half.

Johnson & Johnson (JNJ) Price Target

Based on 24 analysts offering 12 month price targets for Johnson & Johnson in the last 3 months. The average price target is $169.97 with a high forecast of $185.00 and a low forecast of $150.00. The average price target represents a 8.38% change from the last price of $156.82.

Technical Analysis - Exponential Moving Average (EMA)

The market have been pretty positive based on past JNJ earnings beat, we are seeing a consolidation just before the earnings, and the momentum continue to be strong and positive, the bulls are still in control, but from the chart, they seem to be having an issue to create a daily uptrend continuation.

If JNJ could provide an earnings beat, and a positive outlook despite the headwinds, we could see a price gap up after its earnings release on 16 July before market open.

Summary

Johnson & Johnson's Q2 2025 earnings report will be a balancing act. While the company faces a significant headwind from Stelara's patent expiration and ongoing challenges in its MedTech segment (especially in China), robust performance from its newer pharmaceutical products and strategic acquisitions are expected to provide an offset.

The focus will be on the actual impact of Stelara biosimilars, the sales trajectory of newer drugs like Carvykti and Tremfya, and management's updated outlook for the remainder of the year, particularly concerning the expected acceleration of growth in the second half. Given JNJ's strong track record of beating earnings estimates and a positive Earnings ESP, there's a good chance of a positive surprise, but the underlying narrative of managing patent cliffs and driving pipeline growth will be paramount.

Appreciate if you could share your thoughts in the comment section whether you think JNJ past earnings beat might give investors confidence that we could expect the same.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.