3 Medical Stocks to Watch as Q2 Earnings Approach: ABT, JNJ, NVS

Strong Q2 results from banks and other financial firms are starting to highlight this week’s earnings lineup, and investors may want to pay attention to several medical companies that are set to report as well.

This is especially true, as the S&P 500 and Nasdaq hit new highs on Tuesday, even as June's CPI report began to show tariff-related inflation increases. Hopefully, the indexes will continue to rise, but it's always noteworthy that the medical sector can serve as an effective hedge against broader market volatility.

Keeping in mind that healthcare is always essential, regardless of economic fluctuations, here are three medical stocks to consider as their Q2 earnings approach.

Johnson & Johnson – JNJ

At the moment, the Zacks Large Cap Pharmaceuticals Industry is in the top 29% of over 240 Zacks industries, and Johnson & Johnson JNJ is a leader in the space to consider.

Reporting its Q2 results before market hours on Wednesday, July 16, Johnson & Johnson is benefiting from a pleasant trend of positive earnings estimate revisions over the last 30 days for fiscal 2025 and FY26. This is despite Johnson & Johnson’s Q2 EPS being slated to dip 5% to $2.66. Still, JNJ shares trade at a reasonable 14.7X forward earnings multiple, offering sound value as one of the most diversified pharmaceutical companies in the world. Furthermore, JNJ has an enticing 3.32% annual dividend yield that sticks out above the industry average of 2.57% and the benchmark S&P 500’s 1.18% average.  

Plus, the pharma giant’s bottom line is still projected to expand 6% this year with FY26 EPS forecasted to rise another 4% to $11.09 per share. It’s also noteworthy that the Zacks ESP (Expected Surprise Prediction) suggests Johnson & Johnson could surpass earnings expectations with the Most Accurate and recent estimates among Wall Street having Q2 EPS pegged at $2.72, and 2% above the Zacks Consensus.

Novartis – NVS

Also belonging to the top-rated Zacks Large Cap Pharmaceuticals Industry is Novartis NVS, which will be reporting Q2 results before the opening bell on Thursday, July 17. Like Johnson & Johnson, Novartis has maintained its dominant position as a top pharma company thanks to its diversified portfolio of various drugs, covering core therapeutic areas like cardiovascular, renal and metabolic, immunology, neuroscience, and oncology.

Novartis’s appealing growth is expected to reflect in its upcoming report, with Q2 sales expected to rise 9% from the prior year quarter to $14.04 billion and EPS projected to spike 21% to $2.38. Magnifying Novartis’ outlook is that FY25 EPS estimates are slightly up in the last month, with FY26 EPS estimates rising over 2% from projections of $9.14 to $9.35 per share. Furthermore, NVS trades at an attractive 13.5X forward earnings multiple while offering a very respectable 2.14% annual dividend.

Abbott Laboratories – ABT

Rounding out the list of medical stocks to watch this week is Abbott Laboratories ABT. Reporting Q2 results on Thursday morning, Abbott's diversified line of healthcare products extends to pharmaceutical products, diagnostic products, nutritional products, and medical products.

On pace to achieve double-digit EPS growth for the foreseeable future, Abbott’s Q2 earnings are expected to rise 9% to $1.25 per share (Current Qtr below). The Zacks ESP also indicates Abbott could top earnings expectations, with the Most Accurate estimate having Q2 EPS slightly above the Zacks Consensus at $1.27. Notably, mid to high single-digit top line expansion is in the forecast for Abbott’s annual outlook, with Q2 sales thought to have risen nearly 7% to $11.07 billion.

Reassuringly, Abbott’s 25.6X forward earnings multiple is near its Zacks Medical-Products Industry average, and ABT has a 1.79% annual dividend yield that tops its peers and the benchmark.

Conclusion & Final Thoughts

Not to set a bearish tone, but the broader market’s historic rebound may make it necessary to consider some defensive positions in the portfolio, and these medical stocks fit the bill ahead of their Q2 reports. Even better, the outlook for Johnson & Johnson, Novartis, and Abbott Laboratories is starting to make their stocks worthy of consideration, even if market volatility doesn’t arise soon.  

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This article originally published on Zacks Investment Research (zacks.com).

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