Core Insights - Johnson & Johnson's (JNJ) MedTech segment, which includes products in orthopedics, surgery, cardiovascular, and vision markets, represents approximately 36% of the company's total revenues [1][11] - In Q3, MedTech sales reached $8.43 billion, reflecting a 5.6% increase on an operational basis [1][11] Sales Performance - The MedTech unit has shown improvement over the last two quarters, primarily due to the acquisitions of cardiovascular businesses, Abiomed and Shockwave, along with advancements in Surgical Vision and wound closure in Surgery [2] - Cardiovascular sales surged by 17.4% in the first nine months of 2025, driven by the strategic acquisitions [3] Strategic Developments - J&J plans to spin off its Orthopaedics franchise into a standalone company named DePuy Synthes, led by industry veteran Namal Nawana [4] - This separation aligns with J&J's strategy to focus on high-growth markets, enhancing growth and margins in the MedTech unit, which has historically been slow-growing [5] Future Outlook - J&J anticipates better growth in the MedTech business in 2026 compared to 2025, fueled by the adoption of new products and a focus on high-growth markets [6] - New product launches, including the Shockwave C2 Aero catheter and Tecnis intraocular lens, are expected to contribute to growth in 2026 [6] Market Challenges - The company faces challenges in China due to the volume-based procurement (VBP) program, which is impacting sales as the program expands [7] Competitive Landscape - J&J's MedTech unit competes with major players like Medtronic, Abbott, Stryker, and Boston Scientific, each with strong positions in various medical device sectors [8][9] Financial Performance - J&J's stock has outperformed the industry, rising 34.1% year-to-date compared to an 8.4% increase in the industry [10] - The company's shares are trading at a price/earnings ratio of 17.02, higher than the industry average of 15.84 [13] Earnings Estimates - The Zacks Consensus Estimate for 2025 earnings remains at $10.86 per share, while the estimate for 2026 has increased from $11.38 to $11.47 [15]

Core Insights - Johnson & Johnson (J&J) anticipates that consensus estimates for its 2026 financial performance are too conservative, projecting higher growth rates for both revenue and earnings per share (EPS) than currently expected [1][9]. Revenue and EPS Projections - J&J expects revenue growth of over 5% in 2026, surpassing the consensus estimate of approximately 4.6% [2][9]. - The company forecasts adjusted EPS to be around 5 cents higher than the consensus of $11.39 per share, with the Zacks Consensus Estimate for 2026 EPS at $11.46 [2][12]. Segment Performance Expectations - The Innovative Medicine segment is projected to experience accelerated growth in 2026, despite the loss of exclusivity for the drug Stelara, which negatively impacted growth by 1070 basis points in Q2 2025 [3][4]. - Sales in the Innovative Medicine Unit rose 4.5% operationally to $44.64 billion in the first nine months of 2025, driven by key products like Darzalex, Tremfya, and new oncology drugs [4][5]. - The MedTech segment is expected to outperform 2025 levels, supported by the adoption of new products and a focus on high-growth markets, with sales rising 5.3% operationally to $25.0 billion in the first nine months of 2025 [6][7]. Product Launches and Innovations - J&J plans to launch several new products in 2026, including the Shockwave C2 Aero catheter and Tecnis intraocular lens, which are anticipated to contribute to growth [6][9]. - The company is also preparing for regulatory submissions for the OTTAVA robotic surgical system, indicating a strategic pivot towards innovation-led growth [7]. Stock Performance and Valuation - J&J's stock has outperformed the industry, rising 34.0% year-to-date compared to a 5.1% increase in the industry [8]. - The company's shares are currently trading at a forward price/earnings ratio of 17.08, higher than the industry average of 15.52 and above its five-year mean of 15.64, suggesting a slightly expensive valuation [11].