JNJ tops expectations, offers tempered outlook

Johnson & Johnson (JNJ) reported its Q4 2024 earnings on Wednesday, delivering adjusted earnings per share (EPS) of $2.04, which beat analysts’ expectations of $1.99 but fell below the $2.29 reported in the same period last year. Revenue came in at $22.52 billion, up 5.3% year-over-year and exceeding the $22.43 billion consensus estimate. Despite the strong top-line performance, the stock dipped 1.2% in premarket trading, reflecting mixed reactions to the results and the company’s guidance.

Segment Performance Breakdown

The Pharmaceutical segment, driven by oncology drugs, was a standout performer. Darzalex, a multiple myeloma treatment, posted a 21% year-over-year increase in revenue to $3.08 billion, surpassing the $3.02 billion estimate. Meanwhile, Xarelto revenue surged 29% to $676 million, far exceeding the $512.4 million expectation. However, sales of Stelara, the blockbuster psoriasis drug, fell 15% to $2.35 billion, slightly missing estimates, as biosimilar competition took hold in several markets. The MedTech segment delivered $8.19 billion in sales, up 6.7% year-over-year, with growth driven by electrophysiology products and cardiovascular solutions from the Shockwave Medical acquisition. Consumer health sales were not highlighted, reflecting the company’s recent focus on pharmaceuticals and MedTech.

Key Metrics and Operational Insights

Oncology and cardiovascular therapies provided a significant boost, with the innovative medicine unit generating $14.33 billion in revenue, a 4.4% increase year-over-year. The MedTech unit saw operational sales growth of 6.7%, supported by product launches and acquisitions, including Shockwave Medical, which contributed $258 million in quarterly sales. Quarterly free cash flow remained robust, enabling investments in pipeline advancements and business acquisitions. However, the strengthening U.S. dollar posed a headwind, impacting international revenue conversion and tempering some of the quarter’s gains.

The company also faced challenges from declining legacy product sales. Stelara’s annual revenue dropped to $10.36 billion, down from $10.59 billion expected, with biosimilars set to erode sales further in 2025. Despite this, Darzalex emerged as JNJ’s top drug with $11.67 billion in annual revenue, reinforcing its position as a growth pillar.

Guidance and Long-Term Outlook

For 2025, JNJ projected adjusted EPS of $10.50-$10.70, reflecting growth of 5.2%-7.2%, and operational revenue between $89.2 billion and $90 billion, below analysts’ consensus of $91.04 billion. Operational sales growth is expected to range between 2.5% and 3.5%, with MedTech and oncology as key drivers. The company emphasized its efforts to mitigate headwinds, including currency fluctuations and biosimilar competition, through innovation and pipeline expansion.

Longer-term, JNJ aims to achieve adjusted operational EPS growth of 8.7% at the midpoint and is targeting $91.3 billion in revenue for 2025. The company highlighted progress in its pipeline, including the approval of its OTTAVA robotic surgery system and promising data for its oncology treatments RYBREVANT and LAZCLUZE.

Conclusion

Johnson & Johnson’s Q4 2024 results showcased strength in oncology and MedTech but highlighted ongoing challenges from biosimilar competition and FX headwinds. The company’s ability to beat EPS and revenue expectations underscores its resilience and strategic focus on high-growth areas like oncology and cardiovascular solutions. However, cautious guidance and a softening global outlook tempered investor enthusiasm, with shares dipping after the release. JNJ’s focus on innovation and operational efficiency positions it well to navigate challenges and maintain its leadership in the healthcare sector.