Johnson & Johnson reports third-quarter results tomorrow (Tuesday, October 14, 2025) before the U.S. market open. With the company now a tighter two-engine model—Innovative Medicine and MedTech—investors will focus on how new products and procedure volumes offset U.S. loss-of-exclusivity (LOE) pressure for Stelara and any late-cycle currency headwinds.
Street Setup (Consensus Snapshot)
- Revenue: ~$22–23 billion (low- to mid-single-digit growth year over year).
- Adjusted EPS: ~$2.75–$2.85.
- Mix: Growth driven by oncology, immunology, and electrophysiology; partially offset by Stelara LOE in the U.S. and normalizing pricing in certain devices.
Five Things to Watch
1) Innovative Medicine: how much of the Stelara gap is filled?
This is the swing factor. The U.S. biosimilar overhang for Stelara (ustekinumab) intensifies through 2H, so attention shifts to:
- Darzalex (multiple myeloma) durability and first-line share gains;
- Tremfya (psoriasis/psoriatic arthritis) growth and net pricing dynamics;
- Carvykti (BCMA CAR-T) capacity expansion and manufacturing yields;
- New-launch contributions (e.g., Rybrevant combinations, Yondelis geographies, and earlier oncology assets).
Investors will parse whether ex-Stelara immunology/oncology growth stays high single-digit to low double-digit, enough to cushion the LOE step-down.
2) MedTech: procedures and pricing vs. inflation.
Look for steady growth in Electrophysiology (Biosense Webster) and Surgical Vision, a gradually improving Orthopaedics tape (hips/knees/spine), and continued penetration in Wound Closure/Endo-mechanical. Key tells:
- Hospital purchasing discipline vs. capital equipment cycles;
- Mix of disposables vs. capital;
- Any update on robotics timelines and competitive positioning.
Mid-single-digit organic growth is the base case; better U.S. procedure volumes could push the segment toward the high end.
3) Margins and opex discipline.
Two moving parts: (i) gross margin pressure from Stelara erosion and biologics manufacturing mix, and (ii) SG&A/R&D intensity tied to late-stage oncology and immunology programs. Bulls want to see stable operating margin ex-LOE and proof that productivity offsets higher launch spend.
4) FX and working capital.
A stronger USD late in the quarter likely shaved ~0.5–1.5 pts from reported growth vs. constant currency. Watch receivables and inventory turns in MedTech—clean working capital would support free cash flow resilience despite LOE.
5) FY-2025 guidance and early 2026 color.
The stock reaction will hinge on the full-year reaffirm/raise and how management frames 2026: the cadence of Stelara declines, Carvykti capacity ramps, and any read-through from pivotal data/filings that could reset the medium-term growth algorithm.
Segment Drill-Down
Innovative Medicine
- Immunology:
- Stelara: U.S. erosion the known headwind; magnitude and payer dynamics in focus.
- Tremfya: Volume growth remains robust; watch net price and new indications.
- Oncology:
- Darzalex: Still the franchise anchor, with subQ adoption a margin lever.
- Carvykti: The key growth call-option—capacity adds, vein-to-vein times, and manufacturing reliability determine revenue inflection.
- Neuroscience & Others: Smaller but additive; any upside helps smooth LOE volatility.
MedTech
- Electrophysiology: Procedure strength, mapping/ablation mix, and international expansion are positives.
- Orthopaedics: Procedure normalization continues; pricing is stable to slightly negative but improving mix helps.
- Surgical Vision & General Surgery: Solid consumables attach rates; watch any commentary on capital budget timing into Q4.
What Could Surprise
Bullish scenario
- Darzalex/Tremfya beat with stronger volume and limited net price drag.
- Carvykti contribution inflects on improved manufacturing throughput.
- MedTech prints high-single-digit organic growth on EP strength.
- FX drag minimal; opex discipline holds margins.
Implication: Beat-and-reaffirm (or slight raise); positive stock reaction.
Bearish scenario
- Faster-than-modeled Stelara step-down and tighter payer controls.
- MedTech slows on capital deferrals or supply-chain noise.
- Higher launch spend compresses operating margins; FX a bigger headwind.
Implication: In-line/under plus cautious FY update; shares fade.
Key Questions for Management on the Call
- How quickly can Carvykti scale—what’s the exit-rate capacity and gross-margin trajectory?
- Is Tremfya still tracking to double-digit growth in 2026 despite payer dynamics?
- What organic growth algorithm (ex-LOE, ex-FX) should investors use for 2026?
- Any update on robotics strategy and medium-term capital intensity in MedTech?
- Capital allocation: pace of M&A/BD vs. buybacks given LOE and pipeline milestones.
Base Case Take
J&J enters Q3 with expectations calibrated for modest top-line growth and EPS stability as LOE headwinds meet a healthier innovation mix. If management demonstrates that new-product momentum plus MedTech execution can hold the full-year guide—and offers convincing 2026 rails around Carvykti/Tremfya—there’s room for the stock to work through LOE turbulence. Absent that clarity, the market will likely sit on its hands until visibility improves.
FAQ
When is the release?
Before U.S. market open on Tuesday, October 14, 2025; the conference call typically follows shortly after the press release.
What numbers should I have in mind?
Street ranges cluster around $22–23B revenue and $2.75–$2.85 adjusted EPS.
What will move the stock most?
The Stelara replacement rate, Carvykti capacity ramp, and MedTech organic growth (especially electrophysiology).
Is FX a meaningful factor this quarter?
Expect a small headwind on reported growth; constant-currency commentary will help isolate underlying trends.
Disclaimer
This article is for information and commentary only and does not constitute investment advice or a recommendation to buy or sell any security. Markets involve risk, including the potential loss of principal. Always do your own research and consider consulting a qualified financial advisor before making investment decisions.
