Johnson & Johnson's MedTech Challenges Loom Amid Chinese Market Pressures And Orthopedics Overhaul, Analysts Say

On Tuesday, Johnson & Johnson (NYSE:JNJ) reported a third-quarter adjusted EPS of $2.42, down 9.0% year-over-year, beating the consensus of $2.21. The pharmaceutical giant reported sales of $22.47 billion, up 5.2% year over year and beating the consensus of $22.16 billion.

Johnson & Johnson updated the full-year 2024 adjusted operational EPS guidance to reflect improved performance and the acquisition of V-Wave; the costs associated with the acquisition more than offset the improvement.

BofA Securities reiterates a Neutral rating and a price target of $170. The analyst projects the Oncology franchise will maintain strong performance next year, with Darzalex and Carvykti expanding their market share globally in first—and second-line+ treatments for multiple myeloma.

Also Read: Johnson & Johnson Ends Phase 2 Study For Dengue Antiviral Amid R&D Reprioritization.

The analyst also anticipates a boost in Rybrevant sales for EGFR+ lung cancer following the approval and launch of its subcutaneous formulation in the first half of 2025.

Additionally, Tremfya is expected to post over 20% year-over-year growth, driven by ongoing launches for inflammatory bowel disease.

In contrast, Stelara could rapidly decline by around 25% as biosimilars enter the U.S. market in January 2025.

Meanwhile, the MedTech segment will likely encounter challenges due to volume-based procurement pressures.

The outcome of the talc litigation remains uncertain. U.S. courts will decide whether Johnson & Johnson can use bankruptcy proceedings to resolve current and future claims.

Needham reports that while Johnson & Johnson saw a slight slowdown in organic MedTech growth in Q3 2024 compared to Q2, with sales falling about 2% below consensus, the analyst attributes this to specific company factors.

These include a higher exposure to the Chinese market, the Orthopedics Transformation program, and competitive pressures.

Management also highlighted potential headwinds in Q4 2024 due to recent hurricanes but expressed greater concern over the shortage of IV solutions than the direct impact of the storms on procedures.

Overall, the analyst views Johnson & Johnson’s performance as neutral for most of the med tech sector.

Price Action: JNJ stock is up 0.15% at $164.34 at the last check Wednesday.

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