Johnson & Johnson (JNJ) delivered a solid performance in the third quarter of 2024, exceeding analysts’ expectations for both earnings and revenue. The pharmaceutical giant reported adjusted earnings per share (EPS) of $2.42, surpassing the consensus estimate of $2.21, despite a year-over-year decline of 9.0%. Revenue came in at $22.47 billion, up 5.2% from the same period last year and beating the consensus estimate of $22.16 billion.
This strong performance was largely driven by the pharmaceutical segment, with notable contributions from Darzalex and Carvykti, key players in the Oncology franchise. Analysts anticipate continued growth in this segment, with these drugs expanding their market share globally for multiple myeloma treatment. Furthermore, Rybrevant sales for EGFR+ lung cancer are expected to receive a boost following the approval and launch of its subcutaneous formulation in the first half of 2025. The inflammatory bowel disease drug Tremfya is also projected to see significant growth, exceeding 20% year-over-year.
However, the company faces headwinds in its MedTech segment. While Johnson & Johnson’s organic MedTech growth slowed slightly in Q3 2024 compared to Q2, falling about 2% below consensus, analysts attribute this to specific factors like higher exposure to the Chinese market, the Orthopedics Transformation program, and competitive pressures. Management also highlighted potential headwinds in Q4 2024 due to recent hurricanes, but expressed greater concern over the shortage of IV solutions than the direct impact of the storms on procedures.
Adding to the challenges, Stelara, a key product in Johnson & Johnson’s portfolio, faces a significant threat from biosimilars entering the U.S. market in January 2025. Analysts predict a rapid decline of around 25% in Stelara sales as a result.
Despite these challenges, analysts remain cautiously optimistic about Johnson & Johnson’s long-term prospects. BofA Securities reiterates a Neutral rating and a price target of $170. The analyst projects the Oncology franchise will maintain strong performance next year, while the MedTech segment will likely encounter challenges due to volume-based procurement pressures. The outcome of the talc litigation remains uncertain, with U.S. courts deciding whether Johnson & Johnson can use bankruptcy proceedings to resolve current and future claims.
Overall, while Johnson & Johnson faced some headwinds in the third quarter, its strong pharmaceutical performance and continued investment in key growth areas suggest a promising future. The company’s ability to navigate these challenges and maintain its position as a leading healthcare company will be closely watched by investors.