Johnson & Johnson stock gapped down Wednesday after the health care giant issued light 2025 sales guidance, taking a hit from foreign exchange rates.
For the year, Johnson & Johnson expects $89.2 billion to $90 billion in sales. The high end of J&J's guidance lagged Street projections for $91.04 billion, according to FactSet. The company also guided to adjusted profit of $10.50 to $10.70 per share, which bracketed the Street's call for $10.55.
Edward Jones analyst John Boylan says J&J's outlook is achievable, "if not conservative."
"We view this guidance as prudent due in part to the expected negative impact of foreign currency," he said in a client note. "Longer-term, we remain encouraged by the progress we see in JNJ's new products and pipeline, including cancer drugs, robotics and other heart products."
But Johnson & Johnson stock tumbled 1.9%, closing at 145.27. Shares are now well below their 50-day moving average, according to MarketSurge.
J&J Earnings Beat, Sales Come In Line
Overall, fourth-quarter metrics were in line with expectations. J&J came in with $2.04 earnings per share and $22.52 billion in sales. Earnings fell 10.9% year over year, but topped forecasts for $1.99. Sales climbed 5.3% and met the Street's estimate for $22.45 billion.
The innovative medicines portfolio shined during the quarter, Boylan said, growing 4.4% on a strict, as-reported basis to $14.33 billion. Jeff Jonas, portfolio manager at Gabelli Funds, called out depression drug Spravato. Spravato sales rose 44% year over year to $297 million and narrowly topped forecasts.
Spravato "is doing extremely well," he said in an email to Investor's Business Daily. "It's been on the market for a few years, but it seems to be getting more attention recently. Also, a lot of their cancer medicines such as Darzalex and Erleada remain very strong. Their blood thinners also had a good quarter, up almost 30%."
Most analysts, though, noted J&J's big immunology drug, Stelara, is soon to face patent expiration. But, excluding that, "I think they're going above their long-term goals in pharma," Jonas said.
Medtech Misses, But Analysts See Promise
On a more bearish note, sales of medical devices were light at $8.19 billion. On a strict, as-reported basis, medtech sales rose 6.7%. But analysts called for $8.22 billion in sales.
"However, we have seen JNJ spend more time and investments in this area, so we may see better growth in the future," Edward Jones' Boylan said.
He rates Johnson & Johnson stock a buy.
Jonas, the Gabelli portfolio manager, noted J&J is expected to launch their Ottava surgical robot later this year internationally. It could compete with Intuitive Surgical's da Vinci.
"I think this is the biggest area to drive margin expansion in the future," he said.
Follow Allison Gatlin on X/Twitter at @IBD_AGatlin.
