Financial Data and Key Metrics Changes - In Q1 2025, Johnson & Johnson reported worldwide sales of $21.9 billion, reflecting a 4.2% increase year-over-year despite a 470 basis point headwind from Stellara [36][37] - Net earnings for the quarter were $11 billion, with diluted earnings per share at $4.54, significantly up from $1.34 a year ago, primarily due to the reversal of a $7 billion talc settlement proposal [38][39] - Adjusted net earnings were $6.7 billion, with adjusted diluted earnings per share at $2.77, representing increases of 1.9% and 2.2% respectively compared to Q1 2024 [38][39] Business Line Data and Key Metrics Changes - Innovative Medicine achieved worldwide sales of $13.9 billion, up 4.2%, with U.S. growth at 6.3% and international growth at 1.5% [40] - Oncology products like Darzalex grew by 22.5%, while Carvicti saw over 100% growth, achieving sales of $369 million [40][41] - MedTech reported worldwide sales of $8 billion, a 4.1% increase, with U.S. growth at 5.1% and international growth at 3% [46] Market Data and Key Metrics Changes - U.S. sales growth was 5.9%, while international sales growth was 2.1%, positively impacted by acquisitions and divestitures [37] - The MedTech segment faced challenges due to one-time events and competitive pressures, particularly in orthopedics, which declined by 3.1% [50][46] Company Strategy and Development Direction - The company plans to invest over $55 billion in the U.S. over the next four years to enhance manufacturing and R&D capabilities [19][20] - Johnson & Johnson aims to exit non-strategic product lines and optimize select sites to improve growth and profitability, with a restructuring program expected to be completed by 2027 [60][61] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to grow despite challenges from Stellara biosimilars and Part D redesign, highlighting a 4.2% growth across Innovative Medicine [10][102] - The company anticipates higher growth in the second half of 2025, driven by new product launches and a strong pipeline [66][71] Other Important Information - The company announced a 4.8% increase in dividends, marking the 63rd consecutive year of dividend increases [22][64] - Johnson & Johnson reversed a $7 billion reserve related to the talc settlement, which is expected to positively impact capital allocation priorities [65] Q&A Session Summary Question: Impact of tariffs on guidance - Management explained that the $400 million in tariffs primarily affects MedTech and includes various tariffs from Mexico, Canada, and China, with limited price leverage available to mitigate these costs [82][86] Question: Gross margins in the quarter - Management noted that gross margins were impacted by Stellara's decline and Part D redesign, with expectations for improvement moving forward [93][96] Question: Stellara biosimilar erosion - Management confirmed that the impact of Stellara biosimilars was in line with expectations, with overall business growth remaining strong despite this headwind [99][102] Question: Recession impact on business - Management indicated that healthcare has proven to be more recession-proof than other industries, with a focus on monitoring job reports as a precursor to healthcare demand [110][112] Question: Section 232 potential pharma tariffs - Management is analyzing the potential impact of Section 232 tariffs and emphasized the importance of partnering with the administration to mitigate vulnerabilities in the healthcare supply chain [117][120]

Sales Performance - Total sales for the first quarter of 2025 reached $21,893 million, a 2.4% increase compared to $21,383 million in 2024[3] - U.S. sales increased by 5.9% to $12,305 million, while international sales decreased by 1.8% to $9,588 million[1] - Innovative Medicine segment reported a 2.3% increase in sales, while MedTech segment sales grew by 2.5%[2] - Oncology sales in the U.S. surged by 26.4% to $3,013 million, with international sales increasing by 9.6%[10] - The MedTech segment's total revenue for Q1 2025 was $2,103 million, reflecting a 16.4% increase compared to $1,806 million in Q1 2024[15] - Total MedTech segment sales reached $8,020 million in Q1 2025, a 2.5% increase compared to $7,821 million in Q1 2024[16] - U.S. MedTech sales grew by 5.1% to $4,213 million, while international sales slightly decreased by 0.2% to $3,807 million[16] - The Vision segment in the U.S. reported a 3.4% increase in sales, totaling $566 million, while international sales remained relatively flat with a 0.4% increase[16] Profitability - Gross profit decreased by 2.3% to $14,536 million, with a gross margin of 66.4% compared to 69.6% in the previous year[3] - Net earnings for the first quarter of 2025 were $10,999 million, a significant increase of 237.9% from $3,255 million in 2024[3] - Adjusted net earnings per share (diluted) rose to $2.77, a 2.2% increase from $2.71 in the previous year[5] Expenses and Taxation - The effective tax rate increased to 19.3% from 12.4% year-over-year[3] - Research and development expenses decreased by 8.9% to $3,225 million, representing 14.7% of sales[3] - The company initiated a restructuring program in the MedTech segment, incurring $55 million in expenses during the first quarter of 2025[6] Segment Performance - US sales in the Immunology segment decreased by 10.5% to $2,196 million, while international sales fell by 15.8% to $1,510 million[12] - The Neuroscience segment reported a 8.6% decline in worldwide sales, totaling $1,647 million, with US sales down 8.1% to $968 million[13] - Cardiovascular/Metabolism/Other segment in the US saw a significant increase of 35.4%, reaching $855 million, while international sales decreased by 19.7%[14] - XARELTO sales in the US increased by 33.3% to $690 million, contributing to a total of $690 million worldwide[14] - US sales for STELARA decreased by 29.8% to $981 million, with international sales down 38.9% to $644 million[12] - The Pulmonary Hypertension segment reported a worldwide revenue of $1,025 million, a decrease of 2.3% from $1,049 million in Q1 2024[13] - SPRAVATO sales in the US increased by 45.0% to $276 million, with worldwide sales reaching $320 million, up 41.9%[12] - The company reported a 2.9% decline in US sales for Infectious Diseases, totaling $315 million, while international sales decreased by 1.9% to $487 million[13] Future Projections - Innovative Medicine segment sales for the full year 2024 are projected to reach $2,225 million, with significant contributions from Pulmonary Hypertension products[18] - Rybrevant and Lazcluze generated $93 million in total sales in Q1 2024, with U.S. sales accounting for $36 million[18] - Talvey's sales in the U.S. for Q1 2024 were $50 million, with full-year expectations of $241 million[18] - Other Oncology products generated $328 million in total sales in Q1 2024, with U.S. sales at $93 million[18] - The company anticipates continued growth in the Pulmonary Hypertension segment, with Q1 2024 U.S. sales of $356 million[18] - International sales of Infectious Diseases products reached $1,395 million in Q1 2024, with U.S. sales at $19 million[18] - The overall operational growth for the MedTech segment was 4.1%, excluding currency effects[16]

Earnings Report - Johnson & Johnson is set to release its first-quarter earnings results on April 15, with analysts expecting earnings of $2.58 per share, a decrease from $2.71 per share in the same period last year [1] - The company is projected to report quarterly revenue of $21.57 billion, up from $21.38 billion a year earlier [1] Product Development - Protagonist Therapeutics announced new data for a pill treating moderate-to-severe plaque psoriasis, with the study conducted in adolescents and adults [2] - The data from the ICONIC program, involving icotrokinra (JNJ-2113), was developed through a partnership with Johnson & Johnson [2] Analyst Ratings - Raymond James analyst maintained an Outperform rating but reduced the price target from $165 to $162 [7] - Morgan Stanley analyst kept an Equal-Weight rating and raised the price target from $163 to $164 [7] - Guggenheim analyst reiterated a Neutral rating [7] - Barclays analyst maintained an Equal-Weight rating and increased the price target from $159 to $166 [7] - Stifel analyst maintained a Hold rating and cut the price target from $170 to $155 [7]

Investment Rating - The report assigns an investment rating of AAA to Johnson & Johnson, AA to Lilly, and AA to Roche, among others [95]. Core Insights - The pharmaceutical industry has seen a marginal increase of 1% in the collective brand value of the top 25 brands in 2025, with the US contributing significantly [20][21]. - Johnson & Johnson remains the most valuable pharmaceutical brand with a brand value of USD 15.5 billion, reflecting a 16% increase [27][34]. - Lilly has experienced the fastest growth in brand value, rising 36% to USD 8 billion, primarily due to its successful weight-loss drugs [40][41]. - The medical devices sector has grown by 5%, with Medtronic now leading the market with a brand value of USD 7.4 billion [23][57]. - The healthcare services sector is under pressure, with a collective decline of 11% in brand value among the top brands, except for UnitedHealthcare, which saw a 14% increase [24][65]. Sector Overview - The pharmaceutical sector is stable, with ongoing consolidation through mergers and acquisitions, such as Amgen's acquisition of Horizon Therapeutics [21]. - Innovation is crucial, with brands like Novo Nordisk and Lilly achieving significant brand value increases through breakthrough drugs [22]. - The medical devices industry is expanding, driven by advancements in technology and patient outcomes [23]. - The US healthcare services sector faces challenges, with declining public sentiment and scrutiny affecting brand reputations [24][25]. Valuation Analysis - Johnson & Johnson's brand value growth is supported by strong sales of key drugs and a commitment to innovation, with plans to invest over USD 55 billion in the US [36]. - Lilly's strategic acquisitions and successful product launches have bolstered its market position [41][43]. - Bayer's brand value increased by 13% to USD 6.2 billion, driven by improved consumer trust [29]. - Novo Nordisk's brand value rose by 7% to USD 5.5 billion, supported by its successful diabetes treatments [30]. Brand Strength Analysis - Johnson & Johnson leads with a Brand Strength Index (BSI) score of 83.5, reflecting strong brand equity [47]. - Bayer follows with a BSI of 82.2, benefiting from its consumer health products [52]. - Pfizer's BSI is 76.3, influenced by its role in the COVID-19 pandemic [54]. Medical Devices - Medtronic's brand value increased by 2% to USD 7.4 billion, driven by recovery in volume and new product introductions [57]. - Terumo experienced the highest growth in the sector, with a 52% increase in brand value to USD 2.3 billion [58]. - Philips leads in brand strength with a BSI of 87.8, benefiting from its consumer-facing electronics business [60]. Healthcare Services - UnitedHealthcare is the most valuable healthcare services brand, with a brand value of USD 54.2 billion and a BSI of 84.76 [65]. - The brand's growth is attributed to increased patient volumes in Medicare Advantage and Medicaid offerings [66]. - Other healthcare brands have seen significant declines, with Elevance Health and Aetna experiencing drops of 34% and 25%, respectively [70].

Core Viewpoint - Johnson & Johnson (JNJ.US) is set to kick off the Q1 2025 earnings season for the U.S. pharmaceutical industry on April 15, 2025, with significant market focus on the impact of tariff measures from the Trump administration on the pharmaceutical sector [1] Financial Performance - Goldman Sachs projects Johnson & Johnson's Q1 total revenue to be $21.5 billion, slightly below the market consensus of $21.6 billion, with innovative pharmaceuticals expected to generate $13.5 billion and medical technology $8 billion [2] - The expected adjusted EPS for Q1 is $2.47, lower than the consensus estimate of $2.57, while the gross margin is anticipated to be 74.6%, in line with expectations [2] - For the full year 2025, Goldman Sachs forecasts total revenue of $90.7 billion, exceeding the consensus of $90.2 billion, with an adjusted EPS of $10.41, slightly below the consensus of $10.50 [2] Business Segments - In the innovative pharmaceuticals segment, management is expected to highlight strong performance from next-generation products, particularly Icotrokinra for ulcerative colitis, and position Tremfya as a potential $10 billion opportunity [3] - The medical technology segment will see market focus shift between macroeconomic outlook and specific market dynamics, with attention on service utilization and capital spending trends, as well as competition in areas like electrophysiology and orthopedics [3] Investment Outlook - Goldman Sachs maintains a "Buy" rating on Johnson & Johnson with a 12-month price target of $172, indicating a potential upside of approximately 13% from the recent closing price [4] - The optimistic valuation reflects confidence in the pharmaceutical business and the company's defensive characteristics, despite acknowledging risks such as slower new product launches and uncertainties related to litigation [4]

Group 1 - The US-China trade war has escalated, with the US increasing tariffs on Chinese products from an initial 34% to 145% [1] - Despite the trade tensions, many American-owned brands disguised as domestic products are thriving in the Chinese market [4] - Harbin Beer, often mistaken as a local brand, was acquired by the American company Anheuser-Busch in 2004 [3][8] Group 2 - Yida chewing gum, popular in China, is owned by the American company Wrigley, which entered the Chinese market in 1996 [11] - Other Wrigley products, such as Green Arrow, are also American brands that perform well in China [14] - Shuanghui Group, known for its hot dogs, was sold to American firms in 2007, with significant ownership by American investor Rothschild [18][22] Group 3 - Jinlongyu, a leading cooking oil brand in China, is part of the "Yihai Kerry" group, which is a joint venture involving the American company ADM [23][25][27] - Dabao, a well-known Chinese skincare brand, was acquired by Johnson & Johnson in 2008, despite its Chinese branding [29][33] - Procter & Gamble, an American company, owns several brands in China, including Head & Shoulders and Pampers, which are often perceived as domestic products [35]

Group 1: Upcoming Earnings Reports - Major banks such as Goldman Sachs, Citigroup, and Bank of America are set to report earnings next week, with Goldman Sachs expected to perform well due to management confidence and downsizing efforts [1][2] - Citigroup's stock is anticipated to gain regardless of quarterly performance, while Bank of America is expected to post decent earnings based on recent trends [3] - Johnson & Johnson's earnings report will be closely watched for updates on ongoing litigation and potential news about new drugs, which could positively impact its stock [4] Group 2: Other Notable Earnings - Abbott Laboratories is expected to show strength in its franchises but may also address ongoing lawsuits affecting its stock [5] - Taiwan Semiconductor, UnitedHealth, and American Express will report earnings on Thursday, with UnitedHealth being labeled a "universal buy" and American Express expected to have a strong quarter despite potential post-report trading issues [7] - Netflix's earnings call is anticipated to highlight its ad-tier subscription model, although external factors such as political drama may overshadow its news [8] Group 3: Economic Indicators - Retail sales data will be released on Wednesday, with expectations of strong numbers based on positive signals from major retailers like Walmart, Amazon, and Costco [6]

Core Viewpoint - The analysis emphasizes the potential of Johnson & Johnson (JNJ) stock as a "Buy" due to its competitive advantages and defensibility in the market [1]. Group 1: Company Analysis - Johnson & Johnson is identified as a high-quality company capable of outperforming the market over the long term [1]. - The analysis focuses on companies with a competitive advantage, referred to as an economic moat, which enhances their market position [1]. - The investment strategy is not limited by market capitalization, allowing for a broader range of investment opportunities from large cap to small cap companies [1]. Group 2: Analyst Background - The analyst has a Master's Degree in Sociology with a focus on organizational and economic sociology, and a Bachelor's Degree in Sociology and History [1].

Core Viewpoint - Johnson & Johnson (JNJ) is set to report its first-quarter 2025 results on April 15, with sales and earnings estimates at $21.66 billion and $2.57 per share respectively. The earnings estimates for 2025 and 2026 have seen slight declines over the past 60 days [1]. Group 1: Earnings Performance - JNJ has consistently exceeded earnings expectations in the last four quarters, with an average earnings surprise of 4.43%. The last reported quarter showed a 2.0% earnings surprise [5]. - The company currently has an Earnings ESP of -2.53% and a Zacks Rank of 3 (Hold), indicating a mixed outlook for the upcoming earnings report [6]. Group 2: Sales Estimates and Drivers - Sales in JNJ's Innovative Medicines segment are expected to be driven by strong performances from key products like Darzalex, Tremfya, and Erleada, with respective sales estimates of $3.13 billion, $939.0 million, and $817.0 million [7][8]. - The sales estimate for the Innovative Medicine unit is $13.46 billion, while the MedTech segment is estimated at $8.14 billion, reflecting challenges in year-over-year comparisons [12][14]. Group 3: Competitive Landscape - The launch of biosimilars for Stelara is anticipated to impact its sales significantly, with estimates for Stelara sales at $1.64 billion [9][10]. - The MedTech business is facing headwinds in the Asia Pacific region, particularly in China, due to government cost containment efforts and competitive pressures [13]. Group 4: Strategic Developments - JNJ's diversified business model has been strengthened by the recent acquisition of Intra-Cellular Therapies for approximately $14.6 billion, enhancing its presence in the neurological and psychiatric drug market [24]. - The company is making progress with its pipeline and has been active in mergers and acquisitions, which is expected to bolster growth in its Innovative Medicine segment [23]. Group 5: Legal and Market Sentiment - Ongoing legal battles related to talc lawsuits have created a bearish sentiment around JNJ's stock, with a recent bankruptcy court ruling rejecting its proposed settlement plan [26]. - Despite potential challenges, JNJ has shown steady revenue and EPS growth, suggesting a long-term positive outlook for investors [27].

Microsoft - Microsoft has a market cap of $2.6 trillion, leading to concerns about its growth potential, but it remains a strong investment for long-term, dividend-seeking investors [2] - The company faces potential headwinds from tariffs affecting production costs, but it generates substantial cash flow to adapt to economic changes [3][4] - Microsoft has a strong brand that allows it to pass on higher costs to consumers without losing market share [6] - The cloud division, Azure, is a significant growth area, with its AI business achieving an annual run rate of over $13 billion, growing by 175% year over year [7][8][9] - Despite a 7% decline in share price this year, it presents a buying opportunity for growth-focused and income-oriented investors [10] Johnson & Johnson - Johnson & Johnson's pharmaceutical segment is currently shielded from tariffs, providing temporary stability [11] - The company is facing thousands of lawsuits related to talc-based products, with a recent bankruptcy maneuver rejected by a judge, but it has a strong track record in litigation [12][13] - Despite legal challenges, Johnson & Johnson maintains a robust balance sheet and is one of the few companies with a credit rating higher than that of the U.S. government [14] - The pharmaceutical and medtech businesses are strong, with a deep pipeline of products leading to new approvals [15] - The company has a long history of dividend increases, having raised payouts for 62 consecutive years, solidifying its status as a Dividend King [16]