Should J&J Stock Be in Your Portfolio After Q2 Beat & Guidance Raise?

Core Insights - Johnson & Johnson (J&J) reported strong second-quarter 2025 results, with both revenue and earnings exceeding expectations [1] Group 1: Financial Performance - J&J's Innovative Medicines unit outperformed expectations despite the loss of exclusivity for Stelara, with key drugs like Darzalex, Erleada, and Tremfya exceeding sales estimates [2] - The company raised its sales guidance for 2025 from $91.0 billion-$91.8 billion to $93.2 billion-$93.4 billion, indicating a growth rate of 5.1%-5.6% compared to the previous expectation of 2.6%-3.6% [3] - Adjusted earnings per share guidance was increased from $10.50-$10.70 to $10.80-$10.90, driven by strong top-line performance and favorable currency impacts [3] Group 2: Business Segments - J&J's MedTech segment also showed improvement, with sales rising 6.1% on an operational basis in Q2, driven by strong performance in Cardiovascular, Surgery, and Vision segments [11] - The Innovative Medicine unit is expected to generate over $57 billion in sales in 2025, with anticipated growth of 5% to 7% from 2025 to 2030 [8] Group 3: Challenges and Risks - The loss of U.S. patent exclusivity for Stelara in 2025 has led to a significant decline in sales, with a 42.7% drop in Q2 2025 [13] - J&J faces ongoing challenges from over 62,000 lawsuits related to its talc-based products, which could impact its financial performance [15] - The company is also dealing with headwinds in China due to the volume-based procurement (VBP) program, which is expected to continue affecting sales in 2025 [12] Group 4: Market Position and Outlook - J&J's stock has outperformed the industry, rising 15.1% year-to-date compared to a 0.5% decline for the industry [19] - The Zacks Consensus Estimate for 2025 earnings has increased from $10.64 to $10.83 over the past week, indicating positive market sentiment [25] - J&J is positioning itself for growth in the second half of the decade, with expectations for operational sales growth in both Innovative Medicine and MedTech segments [26]