Buying J&J Stock Ahead of Q3 Earnings? Here's What You Should Know

Johnson & Johnson JNJ will begin the earnings season for the drug & biotech sector when it reports its third-quarter 2025 results on Oct. 14. The Zacks Consensus Estimate for third-quarter sales and earnings is pegged at $23.74 billion and $2.77 per share, respectively. The Zacks Consensus Estimate for 2025 earnings has remained unchanged at $10.86 per share, while that for 2025 has risen from $11.36 per share to $11.38 per share over the past 60 days.

JNJ Estimate Movement

JNJ’s Earnings Surprise History

The healthcare bellwether’s performance has been pretty impressive, with the company exceeding earnings expectations in each of the trailing four quarters. It delivered a four-quarter earnings surprise of 5.73%, on average. In the last reported quarter, the company delivered an earnings surprise of 4.14%.

JNJ’s Stock Price & EPS Surprise

J&J has an Earnings ESP of +2.17% and a Zacks Rank #3 (Hold), indicating a likely positive surprise. Per our proven model, companies with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 have a good chance of delivering an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Factors Shaping JNJ’s Upcoming Results

Sales in J&J’s Innovative Medicines segment are expected to have been driven by higher sales of key products such as Darzalex, Tremfya and Erleada due to strong market growth and share gains.

For Darzalex, the consensus mark is pegged at $3.63 billion, while our model estimates sales of $3.67 billion.

The Zacks Consensus Estimate for Tremfya is $1.3 billion, while our model estimate is $1.28 billion.

The Zacks Consensus Estimate for Erleada sales is $947.0 million, while our model projects sales to be $952.0 million.

Other products like Xarelto and Simponi/Simponi Aria are likely to show growth. The rapid adoption of new drugs like Carvykti, Tecvayli, Talvey, Rybrevant, plus Lazcluze and Spravato is likely to have contributed to top-line growth.

Sales of the key drug Stelara are likely to have declined due to the impact of biosimilar competition.

Several biosimilar versions of Stelara have been launched in the United States in 2025. According to patent settlements and license agreements, Amgen AMGN, Teva Pharmaceutical Industries TEVA, Samsung Bioepis/Sandoz and some other companies have already launched Stelara biosimilars this year. The Stelara LOE negatively impacted the Innovative Medicines segment growth by 1170 basis points. We expect the negative impact to be steeper in the third quarter as the number of biosimilar entrants is expected to have increased.

The Zacks Consensus Estimate for Stelara sales is pegged at $1.54 billion, while our model projects sales of $1.56 billion.

Imbruvica sales are likely to have declined due to rising competitive pressure in the United States, due to new oral competition and the impact of Medicare Part D redesign. The Zacks Consensus Estimate for Imbruvica is $683.0 million, while our model indicates sales to be $674.6 million.

Generic/biosimilar competition for drugs like Zytiga and Remicade is likely to have hurt the top line.

The negative impact of the Part D redesign is expected to have weighed on sales of drugs like Stelara, Imbruvica, Tremfya and Erleada.

The Zacks Consensus Estimate for J&J’s Innovative Medicine unit is $5.25 billion, while our estimate is $15.28 billion. 

In April, the FDA approved J&J’s monoclonal antibody, Imaavy (nipocalimab), for its first indication, generalized myasthenia gravis, an autoantibody disease. Investors will be keen to know the drug’s initial sales numbers on the third-quarter conference call.

J&J’s MedTech business improved from the first-quarter levels, driven by the newly acquired cardiovascular businesses, Abiomed and Shockwave, as well as in Surgical Vision and wound closure in Surgery. The MedTech segment is expected to continue seeing strong momentum in Cardiovascular, Surgery and Vision in the third quarter, backed by increased adoption of newly launched products.

J&J’s MedTech business has been facing continued headwinds in the Asia Pacific, specifically in China, where sales are being hurt by the impact of the volume-based procurement (VBP) program. VBP is a government-driven cost containment effort in China. Sales in China are likely to have continued to be hurt by the impact of the VBP program in the third quarter.

The Zacks Consensus Estimate for J&J’s MedTech segment is $8.35 billion, while our model estimate is $8.41 billion.

Nonetheless, a single quarter’s results are not so important for long-term investors. Let us delve deeper to understand whether to buy, sell or hold J&J stock ahead of earnings.

JNJ’s Stock Price Performance & Valuation

J&J’s shares have outperformed the industry year to date. The stock has risen 32.2% in the year-to-date period compared with a 7.8% increase of the industry. The stock has also outperformed the sector as well as the S&P 500, as seen in the chart below.

JNJ Stock Outperforms Industry, Sector & S&P 500

From a valuation standpoint, J&J is slightly expensive. Going by the price/earnings ratio, the company’s shares currently trade at 16.97 forward earnings, higher than 15.88 for the industry. The stock is also trading above its five-year mean of 15.64.

JNJ Stock Valuation

J&J’s biggest strength is its diversified business model. With last year’s complete separation of the Consumer Health segment into a newly listed company called Kenvue KVUE, J&J has become a two-sector company, focusing on the Pharmaceutical and MedTech fields.

J&J’s Innovative Medicine unit is showing a growth trend. The segment’s sales rose 2.4% in the first half of 2025 on an organic basis despite the loss of exclusivity for a blockbuster drug like Stelara, and the negative impact of the Part D redesign. J&J expects continued growth in the second half of 2025 to be driven by its key products such as Darzalex, Tremfya, Spravato and Erleada, new drugs like Carvykti, Tecvayli and Talvey and new indications for Tremfya and Rybrevant.

J&J’s MedTech segment sales improved in the second quarter from the first-quarter levels, driven by Cardiovascular, Surgery and Vision, which are likely to drive growth in the second half too.

J&J is also rapidly advancing its pipeline, attaining significant clinical and regulatory milestones that will help accelerate growth through the back half of the decade. J&J has also been on an acquisition spree, with the latest acquisition of Intra-Cellular Therapies strengthening its presence in the neurological and psychiatric drug market.

The Stelara patent cliff, the impact of Part D redesign and MedTech China issues are significant headwinds for J&J in 2025. The uncertainty around the unresolved legal issues lingers. However, the company looks quite confident that it will be able to navigate these challenges.

Stay Invested in J&J’s Stock

J&J has shown steady revenue and EPS growth for years. No matter how the second-quarter results play out, one may consider staying invested in JNJ, considering its stock price appreciation this year, rising estimates and a decent valuation.

J&J considers 2025 to be a “catalyst year,” positioning the company for growth in the second half of the decade. J&J expects operational sales growth in both the Innovative Medicine and MedTech segments to be higher in the second half than in the first. While newly launched products should drive growth in the Innovative Medicines segment in the second half, the MedTech segment may benefit from new products and easier comps. J&J expects growth to accelerate from 2026 onward.

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

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