Johnson & Johnson (NYSE: JNJ) FY Conference Summary Company Overview - **Company**: Johnson & Johnson (J&J) - **Date of Conference**: January 12, 2026 - **Speaker**: Joaquin Duato, Chairman and CEO Key Points Company Performance and Growth Outlook - J&J experienced significant outperformance in 2025, with expectations for continued growth in 2026, projecting double-digit growth later in the decade [4][8] - The company is on track to become the largest healthcare company with over $100 billion in sales [4] - The innovative medicine group, excluding Stelara, grew by 16% in Q3, highlighting strong fundamentals [4] Strategic Focus Areas - J&J is focused on six key areas: - **Innovative Medicine**: Oncology, Immunology, Neuroscience - **Medical Technology**: Cardiovascular, Surgery, Vision [4] - The company plans to launch approximately a dozen new products, including Icotrokinra and a new coronary catheter in 2026 [5][6] Pipeline and Product Development - Recent advancements include the filing of Ottava, a robotic soft tissue surgical system, and the acquisition of Halda, a precision oncology platform [7] - The company aims to invest $55 billion in R&D, technology, and manufacturing in the U.S. to enhance local production of advanced medicines [10] Industry Policy Environment - J&J has reached agreements with the government to open access and lower prices for medicines, which is expected to positively impact the company and the industry [9][10] - The agreements also include exemptions on pharmaceutical tariffs, alleviating previous policy overhangs [9] Financial Position - J&J maintains a strong financial position with a triple-A rated balance sheet and robust cash flow, allowing for simultaneous investment and shareholder returns [7][8] Growth Drivers in Pharmaceuticals - **Oncology**: Targeting $50 billion in sales by 2030, with strong products like Darzalex and Rybrevant [14][18] - **Immunology**: Tremfya is expected to exceed $10 billion in sales, with Icotrokinra set to expand market access as the first oral IL-23 blocker [16][26] - **Neuroscience**: Spravato and Caplyta are highlighted as significant growth drivers, with Caplyta projected to exceed $5 billion [36] MedTech Business Strategy - J&J is focusing on high-growth areas in MedTech, particularly in cardiology, surgery, and vision, with plans to separate the orthopedics franchise to enhance growth and margins [39][46] - Key priorities include advancing cardiac ablation technologies and establishing a strong presence in robotic surgery with Ottava and Monarch [41][44] Future Milestones - Anticipated approvals in 2026 include Ottava for robotic surgery and new products in cardiology and surgery [49] - The robotic platform is expected to contribute significantly to growth from 2028 onwards [50] Business Development Strategy - J&J will continue to focus on early-stage deals for portfolio expansion, with a strong emphasis on identifying transformative technologies [52][53] Conclusion - J&J is entering a cycle of accelerated growth with multiple drivers, projecting a better performance in 2026 compared to 2025, and aiming for double-digit growth by the end of the decade [54]

Core Insights - The medical sector is increasingly adopting artificial intelligence (AI), enhancing drug synthesis, device creation, and diagnostic accuracy [2][3] Group 1: Eli Lilly and Co. (LLY) - Eli Lilly focuses on cardiometabolic health, neuroscience, oncology, and immunology, which are high-growth areas with significant commercial potential [5] - Demand for LLY's GLP-1 drugs, Mounjaro and Zepbound, remains strong, contributing to robust sales in 2025 [6] - LLY is advancing its pipeline with an oral GLP-1 obesity pill, orforglipron, expected to launch next year [7] - Eli Lilly is collaborating with OpenAI for novel medicine discovery and invested $409 million in Genetic Leap for AI-driven drug discovery [7] - The company is building a supercomputer with NVIDIA to enhance its AI capabilities, with expected revenue and earnings growth rates of 22.3% and 41.3% respectively for the current year [8] - LLY has a return on equity (ROE) of 109.5%, significantly higher than the industry average of 37% [9] Group 2: Medtronic plc (MDT) - Medtronic is integrating AI into its solutions to improve patient care and operational efficiency, including an AI-powered surgical video management platform [10] - The GI Genius project enhances colorectal cancer detection, increasing survival rates by identifying polyps that may be missed [11] - Medtronic's partnerships leverage AI to optimize cardiac procedures and improve diagnostic precision, driving growth in the medtech sector [12] - The company has an expected revenue and earnings growth rate of 7.5% and 2.7% respectively for the current year [14] - MDT has a ROE of 14.9%, outperforming the industry average of -2.5% [14] Group 3: Intuitive Surgical Inc. (ISRG) - Intuitive Surgical is embedding AI into its robotic systems, providing objective performance indicators for surgeons [15] - The company is piloting telecollaboration for remote surgical support, enhancing training and decision-making [16] - ISRG's revenue and earnings growth rates are expected to be 14.3% and 11.1% respectively for the current year [19] - ISRG has a ROE of 15.1%, compared to the industry's ROE of -18.7% [19] Group 4: Regeneron Pharmaceuticals Inc. (REGN) - Regeneron utilizes AI and machine learning for drug target identification, clinical trial optimization, and precision medicine [20] - The company has seen revenue growth driven by strong performance from Dupixent and Libtayo, despite declining sales of Eylea [21] - REGN's expected revenue and earnings growth rates are 4.9% and -0.4% respectively for the current year [23] - REGN has a ROE of 13.8%, significantly higher than the industry's ROE of -65.41% [23] Group 5: Johnson & Johnson (JNJ) - Johnson & Johnson's MedTech division is focused on AI technologies for surgical robotics and digital surgery analytics [24] - The company has developed the Ottava robotic surgery platform and the Caresurgical/VELYS digital surgery systems, enhancing procedure planning [25] - JNJ has an expected revenue and earnings growth rate of 5% and 5.7% respectively for the current year [26] - JNJ has a ROE of 32.7%, compared to the industry's ROE of 37% [26]

Core Insights - The medical sector is rapidly adopting artificial intelligence (AI), significantly transforming diagnostics, treatment, and operational efficiency in 2024 [1] - AI-powered diagnostics have become central to enhancing accuracy and speed in medical practices [1] Group 1: AI Adoption in Healthcare - The healthcare sector is typically defensive, characterized by low-beta and dividend-paying stocks, but AI has turned several stocks into potential high-growth providers [2] - Key stocks benefiting from AI integration include Eli Lilly and Co. (LLY), Medtronic plc (MDT), Intuitive Surgical Inc. (ISRG), Regeneron Pharmaceuticals Inc. (REGN), and Johnson & Johnson (JNJ) [2] Group 2: Eli Lilly and Co. (LLY) - Eli Lilly focuses on cardiometabolic health, neuroscience, oncology, and immunology, which are high-growth areas with significant commercial potential [5] - Strong demand for LLY's GLP-1 drugs, Mounjaro and Zepbound, is driving top-line growth, supported by international market launches and increased production [6] - LLY is advancing its pipeline in obesity and diabetes, with an oral GLP-1 obesity pill expected to launch next year [7] - The company is collaborating with OpenAI and investing in AI-driven biotech initiatives, including a $409 million investment in Genetic Leap [9] - LLY has an expected revenue growth rate of 22.3% and earnings growth rate of 41.3% for the current year, with a beta of 0.35 and a dividend yield of 0.6% [9][10] Group 3: Medtronic plc (MDT) - Medtronic is integrating AI into its surgical systems and endoscopy to enhance patient care and operational efficiency [11] - The GI Genius project uses AI algorithms to detect colorectal polyps during colonoscopies, improving cancer survival rates [12] - MDT's partnerships leverage AI to optimize cardiac procedures and improve diagnostic precision, positioning the company for growth in medtech innovation [13] - Medtronic has an expected revenue growth rate of 7.5% and earnings growth rate of 2.7% for the current year, with a beta of 0.71 and a dividend yield of 3% [15] Group 4: Intuitive Surgical Inc. (ISRG) - Intuitive Surgical is embedding AI and digital tools into its robotic ecosystem, enhancing surgical performance metrics [16] - The company is piloting telecollaboration through Intuitive Telepresence, allowing remote surgical support [17] - ISRG has an expected revenue growth rate of 14.3% and earnings growth rate of 11.1% for the current year, with a beta of 0.39 and an ROE of 15.1% [20] Group 5: Regeneron Pharmaceuticals Inc. (REGN) - Regeneron utilizes AI and machine learning for drug target identification, clinical trial optimization, and precision medicine [21] - The company has seen revenue growth driven by strong performance from drugs like Eylea HD and Dupixent, despite declining sales of its lead drug [22] - REGN has an expected revenue growth rate of 4.9% and earnings growth rate of -0.4% for the current year, with a beta of 0.39 and a dividend yield of 0.5% [24] Group 6: Johnson & Johnson (JNJ) - Johnson & Johnson's MedTech division applies AI technologies for surgical robotics and digital surgery analytics [25] - The company has developed the Ottava robotic surgery platform and the Caresurgical/VELYS digital surgery systems, enhancing procedure planning and real-time data sharing [26] - JNJ has an expected revenue growth rate of 5% and earnings growth rate of 5.7% for the current year, with a beta of 0.34 and a dividend yield of 2.5% [27]

Core Viewpoint - The article discusses three stocks—Microsoft, Johnson & Johnson, and Coca-Cola—that are recommended for investors to consider in preparation for potential economic downturns, highlighting their strong dividend-paying capabilities and resilience during recessions [1][2]. Group 1: Microsoft - Microsoft has a market cap of $3.5 trillion and is expected to achieve a 14.9% compound annual growth rate (CAGR) over the next five years, potentially doubling its value [4][6]. - The company's cloud computing division, Azure, is experiencing rapid revenue growth, supported by a significant $250 billion commitment from OpenAI, enhancing its competitive position against Amazon [5][7]. - Microsoft has increased its dividend payouts by 152.8% over the past decade, making it an attractive option for growth-oriented investors [7]. Group 2: Johnson & Johnson - Johnson & Johnson is considered a "recession-proof" stock due to its consistent revenue generation from healthcare products, which remain in demand regardless of economic conditions [8][9]. - The company boasts a strong balance sheet with a credit rating higher than that of the U.S. government and has a history of 63 consecutive dividend increases [9][11]. - Despite facing challenges such as U.S. drug price negotiations that may impact profitability, Johnson & Johnson is still viewed as a solid investment, though it may not achieve the necessary CAGR to double in five years [11][12]. Group 3: Coca-Cola - Coca-Cola operates in the consumer staples sector, known for its resilience during economic downturns, supported by a strong brand portfolio [13][14]. - The company has a history of innovation and product adaptation, which helps maintain its market position and strong dividend program, with 63 consecutive dividend increases [15][17]. - However, Coca-Cola is unlikely to double in value over the next five years due to competition and macroeconomic challenges, making it a more stable choice for income investors rather than high-growth seekers [17][18].

Core Insights - Intuitive Surgical has been a leader in robotic-assisted surgery (RAS) for 25 years but faces increasing competition that may disrupt its market position [2][3] - The company has advantages such as a first-mover position and a large installed base of da Vinci systems, which may help it maintain its leadership [7][9] Competitive Landscape - Medtronic is developing the Hugo system, which has completed clinical trials for urologic procedures and is awaiting regulatory clearance, posing a direct challenge to the da Vinci system [5] - Johnson & Johnson is also working on the Ottava system, currently in clinical trials for gastric bypass, which will add competitive pressure to Intuitive Surgical [6] Company Advantages - Intuitive Surgical's da Vinci system has a long history of use and has received approvals across many indications, providing a first-mover advantage [7] - The company has a significant installed base of 10,763 da Vinci systems, representing a 13% year-over-year increase, which creates high switching costs for healthcare facilities [9] - The recurring revenue from instruments and accessories, which need regular replacement, contributes to the company's financial stability [10] Market Potential - The market for robot-assisted procedures is underpenetrated, suggesting that increased competition could lead to greater awareness and demand for these minimally invasive procedures [11] - An aging population is projected to increase healthcare spending, particularly for the types of procedures offered by Intuitive Surgical, which may boost procedure volume [12] Financial Outlook - Intuitive Surgical has consistently generated steady revenue and earnings growth, and it is expected to continue delivering superior returns to patient investors over the next decade [13]

Core Viewpoint - Johnson & Johnson is entering a new growth cycle focused on surgical robotics, cardiovascular technology, and portfolio restructuring, with plans to spin off its orthopedic business within the next two years [2] Group 1: Rationale for Focus - The company is systematically reallocating resources from low-growth sectors, such as traditional implants and consumables, to high-growth areas including surgical robotics, cardiovascular interventions, and digital surgical ecosystems [4] - This strategic shift is driven by two main factors: market trends towards minimally invasive, intelligent, and digital surgery, and Johnson & Johnson's strong capabilities in surgical instruments, visualization systems, and digital data management, bolstered by recent large-scale acquisitions in the cardiovascular field [4] Group 2: Key Business Lines - Surgical Robotics: The company is focusing on dual main lines and localization strategies, with flagship projects like Ottava, an integrated laparoscopic robotic system designed to optimize surgical workflow and space utilization [5][6] - The Monarch platform, developed for early lung cancer diagnosis and biopsy, is set to expand into neurosurgery and urology, with AI navigation and imaging enhancement features [9] - Investment in RealStar Surgical, a Chinese company developing a modular laparoscopic robotic system, highlights the company's strategy to deepen its presence in emerging markets [10] Group 3: Financial Signals - In Q2 2025, Johnson & Johnson reported total revenue of approximately $23.7 billion, a year-on-year increase of 5.8%, with cardiovascular and surgical businesses contributing significantly to this growth [12] - The orthopedic market is experiencing a slowdown, prompting the decision to spin off the orthopedic business to enhance capital efficiency and overall valuation [12] Group 4: Orthopedic Business Handling - The orthopedic division, DePuy Synthes, will be spun off into an independent company within 18-24 months, allowing it to grow at its own pace while retaining its brand and product system [15] Group 5: Observations - The restructuring is seen as a strategic move to align the business structure with the innovation cycle in medical technology, focusing on high-growth areas like robotics and cardiovascular solutions [16] - Johnson & Johnson's robotic layout is forming a global dual-track system, while cardiovascular integration is accelerating the construction of a comprehensive treatment loop [18]

Group 1 - Johnson & Johnson (JNJ) is recognized as one of the 13 Best Consistent Dividend Stocks to buy now [1] - The company has a diversified business model, with key growth drivers including cancer treatments like Darzalex and Erleada, and immunology drug Remicade [2] - New product introductions include Imaavy for myasthenia gravis and TAR-200, an investigational treatment for bladder cancer awaiting regulatory feedback [2] Group 2 - Johnson & Johnson is a significant player in the medical device sector, with long-term growth potential in its robotic-assisted surgery system, Ottava, currently in clinical trials [3] - The company is a Dividend King, boasting 63 years of dividend growth, with a current quarterly dividend of $1.30 per share and a dividend yield of 2.92% as of September 12 [3]

Core Insights - The article discusses the potential of three major healthcare companies—AbbVie, Johnson & Johnson, and Abbott Laboratories—to reach a market capitalization of $1 trillion within the next decade, highlighting their current market caps and required growth rates to achieve this milestone. Group 1: AbbVie - AbbVie has a current market cap of approximately $369 billion and requires a compound annual growth rate (CAGR) of 10.5% to join the trillion-dollar club within 10 years [4] - The company has seen positive revenue and earnings growth driven by its immunology drugs, Skyrizi and Rinvoq, which are expected to continue their sales growth until patent expiration in 2033 [5] - AbbVie has a strong pipeline and has made recent acquisitions in various fields, enhancing its growth prospects [6] - The company has increased its dividends for 53 consecutive years, offering a forward yield of 3% [7][8] Group 2: Johnson & Johnson - Johnson & Johnson currently has a market cap of $429 billion and needs an 8.8% CAGR over the next decade to reach a trillion-dollar valuation [9] - The company maintains consistent revenue and earnings due to its diverse portfolio of drugs and medical devices, despite facing some patent cliffs [10] - Johnson & Johnson is developing a robotic-assisted surgery device, Ottava, which could be a significant growth driver [11] - The company has a solid dividend history with 62 consecutive years of payout increases and a forward yield of approximately 3% [12] Group 3: Abbott Laboratories - Abbott Laboratories has a market cap of $231 billion and requires a CAGR of 15.8% to reach $1 trillion by 2035, which is considered a challenging target [13] - The company is diversified across four segments: medical devices, nutrition, diagnostics, and established pharmaceuticals, which helps mitigate risks [13] - Abbott is a leader in continuous glucose monitoring devices, with its FreeStyle Libre being the most successful medical device in history by dollar sales [15] - The company has increased its dividends for 53 consecutive years, with a forward yield of 1.8% [16][17]

Core Insights - Rising demand for precision and personalized medicine is driving the need for AI-enabled medical devices to provide individualized diagnostics and treatments [1] Group 1: AI Applications in Medical Devices - Generative AI and agentic AI are increasingly integrated into medical devices, enhancing clinical workflows and patient care by analyzing patient-specific data [3] - Generative AI is utilized for content creation and design optimization, while agentic AI enables autonomous decision-making in medical devices [4] Group 2: Company-Specific Insights Boston Scientific Corp. (BSX) - Boston Scientific is experiencing strong demand in its MedSurg and Cardiovascular lines, with significant traction for its WATCHMAN FLX and FLX Pro devices [6] - The company leverages AI in heart diagnostics, arrhythmia mapping, and coronary imaging, with an expected revenue growth rate of 18.3% and earnings growth rate of 18.7% for the current year [8][9] Johnson & Johnson (JNJ) - Johnson & Johnson's MedTech division focuses on AI technologies for surgical robotics and digital surgery analytics, with an expected revenue growth rate of 5.2% and earnings growth rate of 8.8% for the current year [12][10] - The company has developed an AI-enabled ecosystem called Ottava for robotic surgery and the Caresurgical/VELYS systems for procedure planning [11] GE HealthCare Technologies (GEHC) - GE HealthCare is witnessing strong market demand driven by rising procedure volumes and capital investments, with AI central to its digital strategy [14] - The company has launched AI-driven solutions like CleaRecon DL and Invenia Automated Breast Ultrasound Premium, with an expected revenue growth rate of 3.5% and earnings growth rate of 0.9% for the current year [16][15] Tempus AI Inc. (TEM) - Tempus AI focuses on advancing precision medicine through AI applications, providing solutions for personalized patient care, particularly in oncology and cardiology [18] - The company has an expected revenue growth rate of 81.1% and earnings growth rate of 55.7% for the current year [20]

Core Insights - The article discusses how Johnson & Johnson and Novartis are positioned to navigate patent expirations for key products while maintaining strong financial performance Group 1: Johnson & Johnson - Johnson & Johnson is facing biosimilar competition for its best-selling product Stelara, leading to a significant revenue drop of 42.7% year-over-year to $1.7 billion in Q2 [4] - Despite the decline in Stelara's sales, the company's overall revenue grew by 5.8% year-over-year to $23.7 billion, and it raised both top- and bottom-line guidance for the year [5] - The company has a diversified pharmaceutical portfolio with growth drivers including cancer medicines Darzalex and Erleada, and newer products like Imaavy and TAR-200 [6][7] - Johnson & Johnson is also a leader in the medical device industry, with potential growth from its robotic-assisted surgery system, Ottava [7] - The company has a strong dividend history, having raised payouts for 62 consecutive years, positioning it as a reliable long-term investment [8] Group 2: Novartis - Novartis is preparing for generic competition for its heart failure medication Entresto, which generated $4.6 billion in sales in the first half of the year, with nearly 52% from the U.S. [9] - Despite the impending patent cliff for Entresto, Novartis expects high-single-digit revenue growth for the year, indicating strong overall performance [10] - The company has a diverse portfolio with several blockbuster products, seven of which generated over $1 billion in revenue each in the first half of 2025 [11] - New products like Vanrafia, approved in April, are expected to contribute to future growth, with peak sales estimates of $1.5 billion [12] - Novartis is involved in patent litigation regarding generic versions of Entresto, which could result in financial compensation if it wins [13] - The company has a solid dividend track record, having raised payouts for 28 consecutive years, making it an attractive option for dividend-seeking investors [14]