Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 24 Jun, 25 | JNJ | Buy | USD 151.39 | USD 158.0 | USD 168.0 | 16 days | Closed |
5.19%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Johnson & Johnson, together with its subsidiaries, researches, develops, manufactures, and sells various products in the healthcare field worldwide. The company's Consumer Health segment provides skin health/beauty products under the AVEENO, CLEAN & CLEAR, DR. CI:LABO, NEUTROGENA, and OGX brands; baby care products under the JOHNSON'S and AVEENO Baby brands; oral care products under the LISTERINE brand; TYLENOL acetaminophen products; SUDAFED cold, flu, and allergy products; BENADRYL and ZYRTEC allergy products; MOTRIN IB ibuprofen products; NICORETTE smoking cessation products; and PEPCID acid reflux products. This segment also offers STAYFREE and CAREFREE sanitary pads; o.b. tampons; adhesive bandages under the BAND-AID brand; and first aid products under the NEOSPORIN brand. It serves general public, retail outlets, and distributors. The company's Pharmaceutical segment provides products for rheumatoid arthritis, psoriatic arthritis, inflammatory bowel disease, and psoriasis; HIV/AIDS infectious diseases; mood disorders, neurodegenerative disorders, and schizophrenia; prostate cancer, hematologic malignancies, lung cancer, and bladder cancer; thrombosis, diabetes, and macular degeneration; and pulmonary arterial hypertension. This segment serves retailers, wholesalers, distributors, hospitals, and healthcare professionals directly for prescription use. Its MedTech segment offers electrophysiology products to treat cardiovascular diseases; neurovascular care products to treat hemorrhagic and ischemic stroke; orthopaedics products in support of hips, knees, trauma, spine, sports, and other; advanced and general surgery solutions that focus on breast aesthetics, ear, nose, and throat procedures; and contact lenses and ophthalmic technologies related to cataract and laser refractive surgery under the ACUVUE brand. This segment serves wholesalers, hospitals, and retailers. Johnson & Johnson was founded in 1886 and is based in New Brunswick, New Jersey.
Net Earnings Surge: Net earnings rose from USD 3.26 billion to USD 10.99 billion YoY, a 238% increase, driven by lower restructuring costs and improved operating margins
Innovative Medicine Growth: Oncology and Immunology saw strong operational growth, contributing to a 4.2% operational increase in the Innovative Medicine segment.
STELARA Impact: STELARA’s biosimilar erosion resulted in an 810 basis point drag on overall Innovative Medicine segment performance
Declining Gross Margin: Gross profit margin dropped from 69.6% to 66.4%, reflecting a 13% increase in cost of goods sold
Johnson & Johnson faces heightened investment risk from accelerating biosimilar competition and U.S. Medicare Part D redesign, which are expected to erode revenue from key legacy products and compress margins across major therapeutic segments
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 151.39 | 135.0 | 158.0 | 168.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Strong Revenue and Operational Performance
In the first quarter of 2025, Johnson & Johnson reported a 2.4% increase in total sales, reaching USD 21.9 billion compared to USD 21.4 billion in Q1 2024. Excluding currency impacts, operational sales grew by 4.2%. This growth was driven primarily by strong performances across the Oncology and Immunology franchises under the Innovative Medicine segment, which saw operational growth of 4.2%. The MedTech segment also recorded a 4.1% operational sales increase, buoyed by contributions from recent product innovations and the acquisition of Shockwave Medical.
Segment-Level Profitability Trends
Despite the sales increase, gross profit declined by 2.3% to USD 14.54 billion due to a 13.0% increase in the cost of goods sold. Operating efficiency was maintained through reduced marketing and R&D expenses, which declined by 2.8% and 8.9%, respectively. Net earnings surged to USD 10.99 billion, a 237.9% increase over the prior year, mainly due to a favorable comparison against last year’s significant “Other expenses” and restructuring charges. Adjusted EPS increased modestly by 2.2%, from USD 2.71 to USD 2.77.
Innovative Medicine Segment Highlights
The Innovative Medicine division delivered USD 13.87 billion in sales, a 2.3% year-over-year increase. The segment's growth was primarily led by continued market expansion of drugs such as DARZALEX, ERLEADA, and TREMFYA. However, this performance was partially offset by biosimilar competition, notably impacting STELARA, and regulatory changes like the Medicare Part D redesign, which pressured several product lines.
MedTech Segment Development
MedTech contributed USD 8.02 billion in Q1 sales, growing by 2.5% compared to the previous year. Growth was driven by successful commercial execution in cardiovascular therapies, including Abiomed’s Impella devices and the newly acquired Shockwave IVL technologies. Vision and Surgery platforms also posted stable performance. However, orthopaedics experienced a drag due to one-time events, competitive pricing, and volume-based procurement policies in China.
Pipeline and R&D Innovation
The company highlighted several promising assets in late-stage development. These include icotrokinra, a targeted oral peptide for psoriasis with 46% of patients achieving complete skin clearance in trials, and CAPLYTA for major depressive disorder, demonstrating significant efficacy with favorable safety outcomes. Continued investment in R&D remains a priority, with USD 3.2 billion allocated in Q1 alone.
Capital Allocation and Strategic Investments
Johnson & Johnson maintained a disciplined capital allocation approach. The company ended the quarter with USD 38.8 billion in cash and marketable securities and deployed approximately USD 14 billion in strategic M&A, including the acquisition of Intra-Cellular Therapies. It also returned USD 3 billion to shareholders through dividends. Free cash flow for the quarter stood at approximately USD 3.4 billion, reinforcing the company's financial flexibility.
Forward Guidance and Risk Considerations
The company raised its midpoint guidance for full-year 2025 operational sales to USD 91.6–USD 92.4 billion, representing 3.8% growth, factoring in contributions from recent acquisitions. Adjusted EPS is expected to grow by 6.2% at the midpoint. However, Johnson & Johnson cautions investors about ongoing risks such as biosimilar erosion, Part D redesign impacts, global pricing pressures, and integration risks from recent acquisitions.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Speculative Buy’ recommendation has been given on Johnson & Johnson (NYSE: JNJ) at the current market price of USD 151.39, as on June 24, 2025 at 08:30 AM PDT.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Healthcare Industry: Drug Manufacturers - General
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| JNJ Johnson & Johnson |
1.15 0.71% | 164.13 | 29.17 | 14.33 | 3.74 | 5.18 | 3.80 | 15.22 |
| LLY Eli Lilly and Company |
9.37 1.23% | 770.87 | 78.14 | 31.95 | 16.34 | 45.83 | 16.65 | 54.36 |
| ABBV AbbVie Inc |
-2.52 1.32% | 188.88 | 61.52 | 14.86 | 5.62 | 51.62 | 6.76 | 20.58 |
| MRK Merck & Company Inc |
-1.31 1.61% | 80.21 | 59.83 | 12.33 | 4.50 | 6.47 | 4.94 | 23.79 |
| AZN AstraZeneca PLC ADR |
-0.2519 0.36% | 69.01 | 38.69 | 16.31 | 4.67 | 5.46 | 5.20 | 17.74 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is Jun 24,2025. The reference data in this report has been partly sourced from REFINITIV.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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