Morningstar

Johnson & Johnson Earnings: Solid Innovation and Manageable Tariff Headwind

Strong sales and promising data should help nudge the firm into mid-single-digit top-line growth.

A sign for Johnson & Johnson is seen outside the headquarters.
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Securities in This Article
Johnson & Johnson
(JNJ)

Key Morningstar Metrics for Johnson & Johnson

What We Thought of Johnson & Johnson’s Earnings

Johnson & Johnson JNJ reported 2.4% sales growth (2.3% in innovative medicine, 2.5% in medtech) and 2.2% adjusted EPS growth in the first quarter. Management raised reported sales growth guidance for 2025 to 3.1% but maintained adjusted EPS guidance for 6.2% growth at the midpoint.

Why it matters: Investors were concerned about how severely the headwinds from Stelara biosimilars and the Medicare Part D redesign would hit the firm, as well as the potential impact of tariffs, but J&J looks on track to grow as expected this year.

  • The acquisition of neuroscience drug Caplyta and foreign exchange fluctuations account for the sales guidance increase, as adjusted operational sales growth was maintained at 2.5% at the midpoint.
  • J&J expects a $400 million impact this year from confirmed tariffs, mostly on its medtech business, with the biggest factor being Chinese retaliatory tariffs. Management noted that existing contracts limit price leverage to mitigate the effects.

The bottom line: We’re maintaining our fair value estimate of $164 per share, as we have slightly increased our sales forecasts for key blood cancer product Carvykti and immunology drug icotrokinra. However, we have also added tariff pressure on medtech and increased our assumed long-term tax rate for J&J.

  • Strong sales for Carvykti, as well as recent promising data for icotrokinra in psoriasis, should help nudge J&J into mid-single-digit top-line growth territory over the next few years.
  • As we discussed in our recent notes on tariffs, we think increased US manufacturing and potential tax policy changes could bring tax rates for biopharma firms closer to the 21% US corporate tax rate level over the next several years, from roughly 15% currently.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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