Stocks of Johnson & Johnson Surrender Early Gains Following Weak Sales Guidance

Johnson & Johnson's stock initially gained on Wednesday after the company reported its fourth-quarter earnings, which exceeded analysts' expectations. However, those gains quickly reversed following the release of mixed guidance for the year ahead.

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The New Brunswick, New Jersey-based healthcare giant posted per-share earnings of $1.41 for the quarter, a decrease from $1.70 in the same period a year ago.

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However, adjusted for one-time items, earnings per share (EPS) came in at $2.04, surpassing the FactSet consensus estimate of $1.99. Sales for the quarter increased by 5.3%, totaling $22.52 billion, which was also above the $22.43 billion consensus forecast.

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The adjusted EPS figure reflects a 22-cent charge related to in-process research and development (IPR&D) expenses associated with the acquisition of V-Wave, a privately held company that develops treatments for heart failure. Johnson & Johnson acquired V-Wave in August for up to $1.7 billion, and the company is now part of J&J's medtech segment.

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Chief Executive Joaquin Duato highlighted the company’s focus on improving the standard of care in various disease areas, including multiple myeloma, lung cancer, inflammatory bowel disease, and heart failure. He emphasized J&J's disease-centric approach, which is aimed at addressing high unmet medical needs in these areas.

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Regionally, the company saw strong sales growth in the U.S., where sales rose by 10% to $13.20 billion for the quarter. International sales grew by 2.5%, reaching $9.32 billion.

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Breaking down performance by business segment, innovative medicine sales grew by 5.1% to $14.33 billion, while medtech sales increased by 7.6% to $8.19 billion. Excluding sales of the COVID-19 vaccine, innovative medicine sales were up 7.5%. Including the COVID-19 vaccine, the increase was 5.7%.

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Within the medtech segment, sales were primarily driven by growth in electrophysiology products, as well as by Abiomed, which J&J had previously referred to as interventional solutions, and wound closure products in general surgery.

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Looking ahead, Johnson & Johnson expects full-year sales for 2025 to range between $89.2 billion and $90.0 billion, reflecting a modest increase of 0.5% to 1.5% compared to 2024.

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The company also provided guidance for adjusted EPS, forecasting a range of $10.50 to $10.70, which represents an increase of 5.2% to 7.2% year-over-year.

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Despite these optimistic growth projections, the company's guidance for the year came in lower than analysts had expected. The FactSet consensus for full-year EPS was $10.53 on sales of $92.9 billion, which is above J&J's current guidance.

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Over the past year, Johnson & Johnson’s stock has fallen by 8.8%, while the S&P 500 has posted a gain of 24.7%, reflecting underperformance relative to the broader market.

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