Johnson & Johnson Earnings: Steady Results, but Longer-Term Drug Pressures Mounting

Johnson & Johnson reported first-quarter results that were largely in line with our expectations, and we don’t foresee any major changes to our fair value estimate. While the company slightly increased its 2023 outlook, it also reduced 2025 drug guidance to $57 billion from $60 billion largely due to changes in foreign-exchange rates, which seems reasonable. J&J has a history of digesting currency headwinds and still meeting guidance, but we believe patent losses and slower new drug launches are weighing on the longer-term drug outlook. Nevertheless, the firm remains well positioned for steady growth from a wide portfolio of innovative products that reinforce its wide moat.