Innovation pipeline, portfolio in focus ahead of Johnson & Johnson’s Q3 earnings

For Johnson & Johnson (NYSE: JNJ), 2025 has been a strong year, marked by an impressive financial performance that drove the stock sharply higher mid-year. Investors will be keeping a close watch on the healthcare behemoth’s third-quarter earnings to check how it deals with macroeconomic challenges. Recent investor optimism also reflects the company’s limited exposure to pharma tariffs, with its significant US investments expected to cushion the impact of import taxes on patented drugs.

Strong Q3 in Cards

Johnson & Johnson will publish its third-quarter FY26 earnings report on Tuesday, October 14, at 6.20 am ET. Market watchers forecast a 14% year-over-year increase in adjusted earnings to $2.75 per share. Their consensus revenue forecast for Q3 is $23.73 billion, up 5.6% from last year’s third quarter. The company has earned the rare distinction of consistently delivering stronger-than-expected quarterly earnings for over a decade.

The stock has gained about 29% in 2025, regularly outperforming the broader market and reaching an all-time high this week. It ranks among the top-performing healthcare stocks in the S&P 500. Despite the relatively high valuation, JNJ appears to be a compelling investment, given the company’s strong track record of rewarding investors even while facing challenges. JNJ has been a favorite among long-term investors — the diversified business model and regular dividend hikes make it an attractive bet.

Yet Another Beat

In the second quarter of fiscal 2025, sales totaled $23.7 billion, up 5.8% year-over-year. Operational sales rose 4.6% in the June quarter. Meanwhile, Q2 adjusted earnings, excluding special items, declined 1.8% YoY to $2.77 per share. On a reported basis, net income was $5.5 billion or $2.29 per share, up 18% from the comparable quarter of fiscal 2024. Both the top line and earnings beat Wall Street’s expectations. Currently, the focus of Johnson & Johnson’s pipeline and portfolio strategy is on six areas of unmet need and where the company is delivering strong growth — oncology, immunology, neuroscience, cardiovascular, surgery, and vision.

From Johnson & Johnson’s Q2 2025 Earnings Call:

“We continue to advance our pipeline, attaining significant clinical and regulatory milestones that will help drive sustained and accelerating growth through the back half of the decade. In MedTech, while we still have work to do, we saw improvement over first-quarter results. Driven by strong performance in the cardiovascular portfolio, surgical vision, and wound closure in surgery. We remain focused on higher-growth markets, enhancing competitiveness to gain market share, and executing against our transformation initiatives to improve margins.“

Road Ahead

Encouraged by the impressive performance across the Innovative Medicine and MedTech business segments, as well as favorable foreign exchange rates, the Johnson & Johnson leadership raised its full-year sales guidance to range between $93.2 billion and $93.6 billion. It also revised up the adjusted earnings forecast to the range of $10.80 per share to $10.90 per share. The company bets on its diversified portfolio and pipeline to deliver strong growth in the second half, while anticipating major regulatory approvals in multiple healthcare areas, including oncology, major depressive disorder, and psoriasis.

In the past two-and-a-half months, shares of Johnson & Johnson have consistently traded above their 52-week average value of $159.39. The stock traded up 1.5% on Friday morning, after closing the last session at an all-time high.