To The Moon

$Johnson & Johnson(JNJ)$ is expected to report its first-quarter results for fiscal Q1 2025 on 15 April 2025 before the market open.

The consensus estimate for the fiscal Q1 2025 revenues is anticipated to come in at $21.66 billion, while the earnings per share consensus estimate is expected to come in at $2.58 per share which is a decline of around 2% compare to same period last year.

Johnson & Johnson (JNJ) Last Neutral Earnings Call Saw Share Price Increase A Modest 3.24%

Johnson & Johnson had a neutral earnings call on 22 Jan 2025 which saw its share price increase by a modest 3.24% since.

Johnson & Johnson showed robust growth in sales and innovation in 2024, particularly in the Innovative Medicine and MedTech sectors. However, earnings were negatively impacted by STELARA biosimilars and recent acquisitions, while challenges in China and decreased margins were noted.

Johnson & Johnson (JNJ) Guidance On MedTech Growth

During Johnson & Johnson's fourth quarter 2024 earnings call, the guidance for 2025 highlighted an expected operational sales growth of 3%, despite facing significant headwinds, including the introduction of U.S. biosimilars for STELARA and macroeconomic pressures in China. The company is projecting adjusted operational earnings per share growth of nearly 9%. Sales growth is anticipated to be driven by key pharmaceutical assets such as DARZALEX and ERLEADA, alongside recently launched products like CARVYKTI and TECVAYLI.

MedTech growth is expected from recent acquisitions such as ShockWave and Abiomed. The 2025 guidance also factors in approximately 50 basis points of favorable impact from acquisitions and divestitures. Despite the challenges, Johnson & Johnson remains confident in its financial outlook, supported by a diversified business model and a robust innovation pipeline.

Key Factors Influencing JNJ Q1 2025 Earnings

Johnson & Johnson reported operational sales growth of 7% for 2024, excluding the COVID-19 vaccine, with Sprabato surpassing $1 billion in annual sales. The company now has 26 platforms generating at least $1 billion in annual revenue.

Pharmaceutical Segment Performance

Blockbuster Drugs: Sales growth of key therapies like Stelara (ustekinumab), Darzalex (multiple myeloma), and Tremfya (psoriasis) will remain critical. Monitor progress in offsetting Stelara’s biosimilar competition (patent expires in 2025 in Europe, 2023–2025 in the U.S.).

STELARA sales declined by 13.6% due to biosimilar competition, impacting worldwide growth by 490 basis points.

Innovative Medicine sales exceeded $14 billion for the third consecutive quarter, driven by double-digit growth in key brands such as DARZALEX, CARVYKTI, and TECVAYLI. Oncology, neuroscience, and pulmonary hypertension segments showed strong growth.

Pipeline Launches: New drugs (e.g., Carvykti for myeloma, Spravato for depression) and label expansions could drive growth.

In 2024, J&J achieved 27 major market approvals and initiated 16 Phase III studies. Notable FDA approvals included TREMFYA for ulcerative colitis and RYBREVANT for non-small cell lung cancer.

COVID-19 Impact: Reduced reliance on COVID-related sales (e.g., vaccines/therapeutics) by 2025.

Medical Devices Growth

Elective Procedures: Recovery in global elective surgeries (e.g., orthopedics, vision) post-pandemic could boost device sales. Economic resilience supports patient spending.

Net earnings for Q4 2024 were $3.4 billion with a diluted EPS of $1.41, compared to $1.70 a year ago, representing a decrease of 11.1% in adjusted net earnings.

Innovation: Robotics (e.g., Ottava surgical robot), orthopedics, and digital surgery platforms may drive market share gains.

MedTech reported annual sales over $30 billion for the second year, with growth in cardiovascular and vision segments. The company launched 15 major products and acquired ShockWave in the MedTech sector.

Innovative Medicine margin declined from 37.4% to 32.5%, and MedTech margin declined from 15.5% to 10.8%, primarily due to strategic investment and acquired IPR&D expenses.

Consumer Health Spin-Off

Kenvue Separation: JNJ completed the spin-off of its Consumer Health division (Kenvue) in 2023. Q1 2025 results will reflect a streamlined focus on Pharma and MedTech, potentially improving margins but reducing total revenue diversity.

Johnson & Johnson invested approximately $50 billion in R&D and M&A in 2024, including the acquisition agreement with Intracellular Therapies, contributing to strategic growth.

Legal and Regulatory Factors

Talc Litigation: Ongoing settlements (e.g., $8.9B proposed in 2023) may impact cash reserves or earnings via legal costs. Final resolution could reduce uncertainty.

Drug Pricing Pressures: U.S. Inflation Reduction Act (IRA) provisions, including Medicare price negotiations, may affect future pricing flexibility for key drugs.

Global Macroeconomic Trends

Currency Headwinds: As a global company (~50% sales ex-U.S.), a strong dollar could pressure international revenue conversion. The earnings per share in Q4 2024 was negatively impacted by $0.22 due to acquired IPR&D expenses related to the ZWave acquisition. Currency fluctuations also posed challenges.

Continued macroeconomic pressures in China, including Volume-Based Procurement (VBP), impacted performance in the region.

Emerging Markets: Growth in Asia, Latin America, and Africa for pharmaceuticals/devices could offset slower-developed markets.

Johnson & Johnson (JNJ) Price Target

Based on 15 Wall Street analysts offering 12 month price targets for Johnson & Johnson in the last 3 months. The average price target is $169.00 with a high forecast of $185.00 and a low forecast of $155.00. The average price target represents a 11.38% change from the last price of $151.73.

If we were to look at 2024 Trends which would focus on Pharma innovation (e.g., oncology, immunology) and MedTech recovery post-pandemic.

But can JNJ reduce the impact from pharmaceuticals reciprocal tariffs, and what would be the impact of tariffs on its MedTech segment.

Significant contributions from the ITCI acquisition starting in 2026 might be something to watch in JNJ guidance.

Technical Analysis - Exponential Moving Average (EMA)

If we looked at how JNJ had traded sideways last week with the fears of impact of the pharmaceuticals reciprocal tariffs, whether these would impact the strategic initiatives JNJ had

• R&D Investment: JNJ’s $14B+ annual R&D budget supports its pipeline, particularly in oncology, immunology, and cardiovascular diseases.

• M&A Activity: Acquisitions (e.g., Abiomed in 2022 for heart pumps) and partnerships may bolster growth in high-margin segments.

I think post-Kenvue spin-off, investors will watch for improved operating margins in Pharma/MedTech (historically ~30%+ vs. Consumer Health’s ~20%).

Here Are Some Risks That Need To Monitor

• Patent Cliffs: Stelara biosimilars could erode ~$10B+ annual sales by 2025–2026 if replacement therapies underperform.

• Regulatory Delays: FDA/EMA pushback on new drug approvals or safety concerns (e.g., talc litigation reputational risks).

• Economic Downturn: Reduced demand for elective surgeries or drug affordability issues in emerging markets.

I think we will need to see much clearer direction when more details are given for pharmaceuticals sectoral tariffs.

Summary

JNJ’s Q1 2025 earnings will likely reflect the following factors amid the tariff turbulence that would be hitting pharmaceuticals, JNJ would be assessing what is the impact of tariffs on its MedTech segment.

1. Pharma Resilience: Success in launching new drugs to counter patent expirations.

2. MedTech Recovery: Stabilization in elective procedures and robotics adoption.

3. Post-Spin-Off Efficiency: Margin benefits from focusing on higher-growth Pharma/MedTech segments.

4. Legal Clarity: Progress in resolving talc litigation and associated financial impacts.

By 2025, JNJ’s ability to sustain its dividend aristocrat status (60+ years of increases) and innovate in high-demand therapeutic areas will be key.

If JNJ execution aligns with its strategic priorities, JNJ could deliver stable earnings growth despite sector-specific headwinds.

Appreciate if you could share your thoughts in the comment section whether you think JNJ could be able to show significant earnings with the Intra-Cellular Therapies (ITCI) acquisition performance.

@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.