J&J Trading Near 52-Week Low: Should You Sell the Stock?

J&J's Legal and Financial Challenges - J&J faces over 62,000 lawsuits related to its talc-based products, primarily baby powders, alleging asbestos contamination causing ovarian cancer [9] - The company failed twice in bankruptcy attempts to resolve talc lawsuits and proposed a $6.5 billion settlement over 25 years to resolve 99.75% of pending cases [2] - J&J's stock has underperformed the industry, falling 7.5% year-to-date compared to the industry's 3.1% growth [13] Patent Expiration and Market Impact - J&J's blockbuster drug Stelara, which generated $8.0 billion in sales in the first nine months of 2024, faces patent expiration in 2025 [3] - Biosimilars for Stelara are expected to launch in the US in January 2025, potentially eroding sales and profits [3] MedTech Segment Performance - J&J's MedTech segment faces headwinds in Asia Pacific, particularly in China, due to the volume-based procurement (VBP) program and anti-corruption campaign [11] - The company expects operational sales in the MedTech segment to grow 5% in 2024, near the lower end of its long-term target of 5%-7% [11] Innovative Medicine Unit Growth - J&J's Innovative Medicine unit is performing above market levels, with sales growth of 6.8% in 2022, 9% in 2023, and 5.6% in the first nine months of 2024 [12] - The company expects 10 new Innovative Medicine products, including cancer drugs Talvey and Tecvayli, to deliver peak non-risk-adjusted operational sales of $5 billion [5] Valuation and Stock Performance - J&J's stock is trading below its 200-day and 50-day moving averages and is cheaper than peers like Eli Lilly and Novo Nordisk [14] - The stock closed at $145.05, close to its 52-week low of $142.75, and has lost more than 10% in the past three months [19] Future Outlook and Strategic Moves - J&J expects positive growth in the Innovative Medicine segment in 2025 despite Stelara's patent expiration, with growth driven by key products like Darzalex and Tremfya [28] - The company has completed acquisitions in MedTech and Innovative Medicine, boosting its pipeline and expecting operational sales growth at the upper end of its 5-7% long-term target [27][28] Industry and Sector Trends - The drug and biotech sector experienced a downturn in the second half of the year due to disappointing Q3 sales, guidance cuts, pipeline setbacks, and political appointments [8] - J&J's stock underperformance is part of a broader trend affecting large drugmakers, influenced by sector-wide challenges [8]