J&J Stock Trading Above 50- & 200-Day SMA for 6 Months: How to Play

Core Insights - Johnson & Johnson's stock has shown strong performance, trading above its 50-day and 200-day simple moving averages since June, achieving a golden cross in mid-July, indicating bullish momentum [1][6] - The company has experienced double-digit revenue growth from key brands and new product launches, with expectations for accelerated momentum in 2026 [3][5] Innovative Medicine Segment - J&J's Innovative Medicine unit reported a 3.4% organic sales growth in the first nine months of 2025, despite the loss of exclusivity for Stelara, with sales exceeding $15 billion in the third quarter [4][6] - Key growth drivers include drugs like Darzalex, Erleada, and Tremfya, along with new launches such as Carvykti, Tecvayli, Talvey, Rybrevant, and Spravato [4][8] - The company anticipates further growth in 2026 from existing and new products, including Tremfya for inflammatory bowel disease and Inlexzo for bladder cancer [5] Pipeline and Regulatory Progress - J&J has made significant advancements in its pipeline, gaining approvals for new products like Inlexzoh/TAR-200 and Imaavy, which are expected to drive growth [6][7] - The company believes that several new products have the potential to achieve peak sales of $5 billion, including Talvey, Tecvayli, and the newly acquired Caplyta [9] MedTech Segment Performance - The MedTech segment has shown improvement, driven by acquisitions and growth in surgical and electrophysiology businesses [10][12] - J&J expects better growth in MedTech in 2026, supported by new product launches and a focus on higher-growth markets [12] Challenges and Headwinds - The loss of patent exclusivity for Stelara in 2025 has significantly impacted sales, with a reported decline of around 40% in the first nine months of 2025 [14][15] - Sales are also affected by the Medicare Part D redesign, with an expected negative impact of approximately $2 billion in 2025 [16] - J&J faces ongoing legal challenges related to its talc-based products, with over 73,000 lawsuits filed [17][18] Stock Performance and Valuation - J&J's stock has outperformed the industry, rising 42.1% over the past year compared to a 15.2% increase in the industry [19] - The stock is currently trading at a price/earnings ratio of 17.98, slightly above the industry average of 17.27 [22] - Earnings estimates for 2025 and 2026 have seen slight upward revisions, indicating positive sentiment [24][26] Investment Consideration - Despite facing headwinds, J&J's strong cash flows, consistent dividend increases, and positive growth outlook suggest it may be a viable investment opportunity [27]