J&J Stock Dips As 2025 Sales Guidance Misses Estimate, But Retail Mood Resilient

During the earnings call, J&J highlighted several growth drivers, including its positioning for 5%-7% annual growth through 2030 and plans to increase its dividend annually.

Shares of Johnson & Johnson fell over 2% on Wednesday, hitting nearly one-week lows, despite reporting better-than-expected fourth-quarter (Q4) earnings.

The pharmaceutical giant posted Q4 adjusted earnings of $2.04 per share, surpassing the consensus estimate of $2.02. 

Revenue for the quarter was $22.5 billion, slightly above the $22.45 billion estimate, driven by robust sales of its cancer treatments.

However, J&J's 2025 sales outlook disappointed Wall Street. The company projected sales growth of 0.5%-1.5%, totaling $89.2 billion to $90 billion, below analysts' expectations of $90.98 billion. 

Adjusted earnings guidance for 2025 ranged from $10.50 to $10.70 per share, aligning with the consensus of $10.53. 

J&J attributed the tempered guidance to impacts from acquisitions, divestitures, and foreign currency fluctuations.

On Stocktwits, sentiment for J&J stayed 'neutral', albeit a few points higher from a day ago, accompanied by a surge in message volume that placed the stock among the platform's top 15 trending symbols. 

Optimistic retail investors viewed the earnings call as a positive and saw the dip as a buying opportunity.

During the Q4 earnings call, J&J highlighted several growth drivers, including its positioning for 5%-7% annual growth through 2030 and plans to increase its dividend annually. 

The company noted investments of approximately $50 billion in R&D and M&A in 2024 and expects its 2025 adjusted pre-tax operating margin to expand by 300 basis points.

J&J's aggressive acquisition strategy has been central to its growth plans since the spinoff of its consumer unit in 2023. 

Last week, the company announced its largest deal in two years: acquiring Intra-Cellular Therapies (ITCI) to enhance its psychiatric drug portfolio. 

While the deal is expected to impact annual earnings in 2025 by $0.30 to $0.35, J&J said it remains confident in its long-term growth strategy.

Looking ahead, J&J faces potential headwinds as three flagship drugs, including Stelara, are set for U.S. government price negotiations in 2026, likely reducing their revenue contribution.

J&J's stock is down 8.5% over the past 12 months but has gained approximately 2% year-to-date.

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