Johnson & Johnson (NYSE: $JNJ) stock remained flat during the Wednesday, January 22, 2025, trading session after exceeding analysts’ expectations in its Q4 results.
Johnson & Johnson Beats Estimates In Q4 Results
For the fourth quarter of fiscal 2024, Johnson & Johnson reported net sales of $22.52 billion, a 5.3% year-over-year increase, in line with estimates of $22.45 billion. The company reported an 11.1% YoY drop in adjusted net earnings to $4.95 billion. Its fourth-quarter adjusted EPS fell 10.09% to $2.04 but beat estimates of $1.99.
For the full year, net sales rose 4.3% to $88.82 billion, while adjusted net earnings declined 4.6% to $24.42 billion. Meanwhile, the company’s full-year adjusted EPS rose 0.6% to $9.98. Johnson & Johnson ended the year with $19.8 billion in free cash flow compared to $18.25 billion the previous year.
Segment Performance
The company’s top-line results were driven by growth in its Innovative Medicine unit, which brought in $14.33 billion in sales in Q4, representing a 4.4% YoY increase. For the full year, the unit brought in $56.96 billion, a 4% YoY increase.
The MedTech unit brought in $8.19 billion in the fourth quarter, which was a 6.7% YoY increase. For the whole year, MedTech brought in $31.86 billion, a 4.8% YoY increase.
Challenges And Opportunities Ahead
During the earnings call, CFO Joseph J. Wolk discussed some of the challenges the company might be facing moving ahead. One of the biggest is the ongoing talc lawsuit. Additionally, the company expects lower medical device sales as China slows down in procedures.
Additionally, the company could soon face competition from generics for its leading anti-inflammatory arthritis medication Stelara. Besides that, they are also facing pricing pressures following their new price negotiated with Medicare, one of its main customers.
During the earnings call, the company pointed out that 20% of its growth in Q4 came from selling its top six drugs, including Darzalex, used for multiple myeloma, and various other cancer drugs. Altogether, they brought in $4.5 billion in Q4.
On January 13, 2025, the company announced that it would purchase Intra-Cellular (ITCI) for $14.6 billion in cash at $132 per share. As part of the acquisition, Johson & Johnson acquired “CAPLYTA®, a drug used in the treatment of schizophrenia and bipolar depression, with a potential market of millions of people.
Forecast Misses Expectations
For fiscal 2025, Johnson & Johnson expects full-year adjusted operational sales of $90.9B to $91.7B, with a $91.3B midpoint. It expects reported sales of $89.2B to $90.0B, with an $89.6B midpoint. At the midpoint, the company’s reported sales forecast is below Wall Street’s estimates of $91.04 billion.
JNJ Stock Performance
Following the guidance miss, JNJ stock fell 1.94% during the Wednesday trading session to $145.27 per share. The stock has dipped 10.15% over the past year and 6.09% in the past six months. It has performed worse than the Healthcare sector, up 1.84% in the past year and 3.82% in the past six months. Meanwhile, the S&P 500 is up 25.76% in the past year, and 9.38% in the past six months.
Analysts give JNJ stock an overall moderate buy rating with an average forecast of $169 per share, which is a 16.34% upside from its closing price. The most pessimistic analyst gives it a forecast of $160, with the highest forecast at $185.
Should You Add Johnson & Johnson Stock To Your Portfolio?
The moderate buy rating is based on the company’s pipeline. Additionally, the company has a long history of dividend increases. Despite post-pandemic challenges, the company’s earnings have continued to grow, which makes it a potentially great addition to a portfolio with a long-term investment horizon.
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