Will J&J's Q2 Results Reflect End of MedTech Issues & Higher Sales?

Core Viewpoint - Johnson & Johnson's MedTech segment, which constitutes approximately 36% of total revenues, is experiencing growth driven by newly acquired cardiovascular businesses and new product uptake, but faces challenges in the Asia Pacific region, particularly in China due to government procurement programs and competitive pressures [1][2][4]. Group 1: MedTech Segment Performance - The MedTech segment's growth in Q2 is attributed to the acquisition of Abiomed and Shockwave, alongside the continued uptake of new products [2]. - Sales in China are negatively impacted by the volume-based procurement (VBP) program and an anticorruption campaign, with no expected improvement in 2025 [2]. - Competitive pressures are affecting growth in specific MedTech areas, such as PFA ablation catheters in U.S. electrophysiology [3]. Group 2: Future Outlook - Sales are anticipated to be higher in the second half of 2025 compared to the first half as the business overcomes challenging first-quarter comparisons and new products gain traction [4]. - Tariff-related costs are expected to negatively impact profits in the MedTech segment [4]. Group 3: Competitive Landscape - J&J's MedTech unit faces significant competition from major players like Medtronic, Abbott, Stryker, and Boston Scientific, each specializing in various medical technologies [4][5]. Group 4: Financial Performance and Valuation - J&J's shares have outperformed the industry with a year-to-date increase of 9.7%, compared to a 0.6% rise in the industry [6]. - The company's shares are reasonably priced, trading at a price/earnings ratio of 14.43, lower than the industry average of 14.99 and below its five-year mean of 15.73 [8]. - The Zacks Consensus Estimate for 2025 earnings has increased slightly from $10.60 to $10.62 per share over the past 30 days [10].