Johnson & Johnson (NYSE:JNJ)’s strong year-to-date performance is likely to continue when the healthcare giant reports third quarter earnings on October 14, according to analysts at Goldman Sachs.
The firm wrote in a note to clients that the stock’s 31% gain this year, which is more than double the S&P 500’s 14% rise, reflects “impressive execution across the Innovative Medicines segment,” which has driven sales and earnings estimates higher relative to peers.
Goldman expects J&J to deliver another quarter of outperformance, noting that “a continuation of these trends in 3Q should bolster investor confidence.”
The analysts said they are once again modeling beats versus consensus in key products, including Tremfya, Darzalex, Carvykti, and Spravato.
They also highlighted “growing investor focus on significant new product cycles sprouting across the company’s pharma business over the next several months,” citing upcoming launches such as Inlexzo in bladder cancer and icotrokinra, an oral IL-23 psoriasis treatment expected to gain approval next year.
In J&J’s MedTech division, Goldman said it expects stable growth despite competitive pressures, supported by steady procedure volumes.
“Our industry diligence points to elevated underlying US procedure volume trends continuing through 3Q,” the analysts wrote.
Beyond quarterly results, Goldman expects investors to pay close attention to policy developments, particularly regarding J&J’s potential deal with the US administration and ongoing discussions around Medicare’s Most Favored Nation (MFN) pricing framework.
“We see JNJ as well positioned given the company’s diversified business model and its $55bn US manufacturing investment pledge,” they wrote.
Goldman also noted the market’s sensitivity to legal developments after a jury ordered J&J to pay $966 million in a talc-related verdict last week.
“JNJ said they believe this is unconstitutional, and will appeal to reverse this decision; importantly, the company noted that there is no impact to its stated reserves,” the analysts wrote.
Reflecting their increased confidence in the company’s outlook, Goldman raised its 12-month price target on J&J shares from $186 to $212.
The higher target is based on a 17x earnings multiple, up from 15.5x previously.
The analysts said the revision “reflects increasing conviction in the commercial momentum behind the pharma franchise (Tremfya, Darzalex, Carvykti), emerging product cycles and pipeline growth opportunities (MM bispecifics, Caplyta, Rybrevant, TAR-200, icotrokinra) and the emerging MFN/policy backdrop where we see JNJ as well positioned.”
Goldman also lifted its long-term product estimates, most notably raising Tremfya’s projected 2030 peak sales to about $10 billion from $8 billion.
“Our increased confidence in Tremfya is due to recent commercial execution and competitive advantages in IBD (e.g. subcutaneous induction in both UC and Crohn’s),” the analysts wrote.
They added that the therapy remains on track to generate roughly $4.8 billion in 2025, in line with J&J’s guidance for more than $10 billion in peak sales.