Why Johnson & Johnson Rallied Today

Shares of Johnson & Johnson (JNJ 5.85%) rallied 6.1% on Wednesday as of 1:18 p.m. ET.

Today, a leading company in pharmaceuticals and medical equipment announced its earnings, surpassing predictions not just in amount, but also prompting management to raise their full-year forecasts. Consequently, the stock has managed to disregard apprehensions related to tariffs from earlier this year.

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Second-quarter highlights include lower-than-expected tariffs and contributions from Caplyta

During the second quarter, Johnson & Johnson saw a 5.8% increase in revenue, reaching an impressive total of $23.7 billion – surpassing predictions. Although the adjusted earnings per share (EPS) decreased by 1.8% compared to last year, this figure still came out slightly ahead of what analysts had anticipated.

The reduction in earnings can be attributed to several factors for Johnson & Johnson, such as the cost of goods sold that incorporated amortization costs related to their acquisition of Intra-Cellular Therapies, a neuroscience-focused company, worth $14.6 billion which was finalized on April 2nd. Additionally, interest expenses rose due to new debt taken for this acquisition. The management also mentioned an anticipated $200 million effect from tariffs in the current year, although this was less than the initial projection of $400 million made in April, as U.S.-China tariffs were reduced on May 12th.

Despite this, it’s worth noting that the company’s Neuroscience division experienced a 14.4% growth year over year when accounting for constant currency. This was only surpassed by the Oncology segment, which saw a robust 22.3% increase.

Management has raised its financial projections for the year, with anticipated revenue ranging from $93.2 billion to $93.6 billion, and adjusted earnings per share (EPS) expected to be between $10.80 and $10.90. This is higher than the previous forecast of $91 billion to $91.8 billion in revenue and $10.50 to $10.70 in EPS.

JNJ remains as blue chip as ever

Johnson & Johnson maintains its top position as the leading blue-chip pharmaceutical and medical technology company within income-focused investment portfolios due to its robust financial performance. Interestingly, despite today’s increase, the stock remains affordably priced at a multiple of only 15 times this year’s projected earnings, offering a dividend yield of 3.4%.

Thus, the stock remains a solid buy or hold for income-oriented, conservative investors.

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2025-07-16 22:14