Johnson & Johnson stock (NYSE: JNJ) lost about 7% in 2024, underperforming the broader S&P 500 index, which gained 23% for the year. Despite strong performances from other pharmaceutical giants like Eli Lilly stock (up 31%) and AbbVie stock (up 15%), Johnson & Johnson’s stock performance has been muted. This is attributed to declining Covid-19 vaccine sales, falling Remicade revenue, and increased competition for some of its drugs.
In this note, while we briefly touch upon J&J’s performance in 2024, we focus on the impact on JNJ stock and how 2025 could turn out. But, if you want upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.
How Did 2024 Turn Out For J&J?
Three trends were clearly visible for J&J in 2024. Firstly, it saw an uptick in its medical devices business, thanks to its recent acquisitions. Electrophysiology, as well as cardiovascular sales, trended higher over the recent quarters. Secondly, there was an increase in market share for some of its blockbuster drugs, including Darzalex, Erleada, and Tremfya. Darzalex now garners around $3 billion in quarterly sales. Lastly, the company faced biosimilar competition for some of its key drugs, including Imbruvica, which saw a 7% y-o-y decline in sales for the first nine month period in 2024. The company is yet to release its full-year results.
2024 was also the year where J&J looked at inorganic growth to expand its MedTech business. J&J acquired V-Wave, which develops heart failure treatment, for $1.7 billion. It acquired Shockwave Medical for $13.1 billion to boost its cardiovascular intervention offerings. On the pharmaceuticals side, J&J acquired Yellow Jersey for $1.25 billion, giving it global rights to eczema drug – NM26. It also acquired Proteologix – a biotechnology company focused on bispecific antibodies for immune-mediated diseases – for $850 million.
Owing to the above acquisitions, the company saw a slight decline in its cash position from $23 billion in 2023 to $20 billion as of Sep 2024. Also, its overall debt increased from $29 billion to $36 billion over the same period. The company increased its dividend by 4.2% to $4.96 in 2024. Furthermore, it spent $2 billion on share repurchases in the first three quarters.
What Does This Mean For JNJ Stock?
JNJ stock declined gradually from levels of $155 in early January last year to $144 by the end of 2024. Looking at a slightly longer term, the performance of JNJ stock with respect to the index over the last four-year period has been quite volatile. Returns for the stock were 11% in 2021, 6% in 2022, -9% in 2023, and -5% in 2024. The Trefis High Quality Portfolio, with a collection of 30 stocks, is less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
Given the current uncertain macroeconomic environment around rate cuts and changes in the White House, could JNJ face a similar situation as it did in 2021, 2023, and 2024 and underperform the S&P over the next 12 months — or will it see a strong jump? We estimate Johnson & Johnson’s Valuation to be $172 per share, over 20% above its current levels of $142. Our forecast is based on 17x forward adjusted expected earnings of $10.22 per share, aligning with the stock’s average P/E multiple over the last five years.
What’s In Store For J&J In 2025?
2025 isn’t going to be pretty for J&J on the pharmaceuticals side. One of its top-selling drugs – Stelara – with annual sales of $11 billion in 2023, now faces biosimilar competition in Europe as well as the U.S. This may result in a meaningful decline in Stelara sales, partly offsetting the gains for some other drugs, such as Darzalex.
Earlier this week, J&J temporarily paused the use of its heart device – Varipulse – due to four reports of neurovascular events. Varipulse was approved by the U.S. FDA just a few months back and was expected to garner over a billion dollars in annual sales. [1] Investors will be monitoring this development.
On the positive side, some of the company’s new drugs, including Carvykti – a multiple myeloma treatment, and Spravato – an antidepressant – have been gaining market share, a trend expected to continue in 2025.
J&J may also secure the FDA approval for its monoclonal antibody – Nipocalimab – which was developed by Momenta Pharmaceuticals, which J&J acquired back in 2020. Nipocalimab is expected to be a blockbuster treatment, if approved. The company recently announced that the FDA has granted fast track designation to its investigational biologic – Posdinemab – for treating patients with early Alzheimer’s disease. This drug may advance to late stage clinical trials.
Overall, JNJ stock looks like it will have a mix of positives and negatives to deal with in 2025. We think Stelara competition will be the biggest factor weighing on the company’s overall performance. That said, with its stock trading at under 14x forward expected earnings, we think the potential headwinds are largely priced in.
While JNJ stock looks like it can see higher levels, it is helpful to see how Johnson & Johnson’s Peers fare on metrics that matter. You will find other valuable comparisons for companies across industries at Peer Comparisons.
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