Johnson & Johnson (JNJ) just delivered some surprising news. The healthcare giant’s stock rocketed 5.5% Wednesday morning, hitting its highest point since late March.
Why the surge? J&J crushed expectations and basically told Wall Street that Trump’s tariff threats aren’t scaring them.
The company posted second-quarter sales of $23.7 billion. That beat analyst forecasts of $22.8 billion. More importantly, J&J raised its sales growth outlook for 2025 from a modest 2-3% to a healthier 3.2-3.7%.
Here’s the kicker about tariffs. Back in April, J&J warned that duty costs could hit $400 million this year. Now they’re saying it’ll be just $200 million. That’s a 50% reduction. The impact is limited to their medical technology division.
This comes as Trump cranked up the pressure Tuesday night. He threatened new pharmaceutical tariffs as early as July’s end. “We’re going to start off with a low tariff and give the pharmaceutical companies a year or so to build, and then we’re going to make it a very high tariff,” Trump said.
CEO Joaquin Duato isn’t panicking. He acknowledged uncertainty around Trump’s drug pricing and tariff policies but praised the recent tax cuts Congress approved. Back in April, Duato had warned against drug levies, saying they could lead to shortages.
The numbers tell a compelling story. J&J’s oncology sales exploded more than 20% in the quarter. That offset declining sales of Stelara, their immune system blockbuster that’s facing patent expiration. The smaller medtech division grew 6%.
Strong sales and favorable foreign exchange rates drove the guidance bump, according to the company.
J&J stock has been a standout performer this year, beating rivals like Eli Lilly, Pfizer, and Merck. It’s also outpaced the broader S&P 500 index.
But there’s a massive cloud hanging over everything. Talcum powder lawsuits.
J&J faces at least 60,000 cases alleging their talc products caused cancer. More get filed daily, court documents show. The company tried three times to settle through bankruptcy. All failed. J&J said it would keep fighting these lawsuits after a judge rejected their latest settlement attempt.
The company isn’t backing down. They plan to challenge plaintiffs’ expert witnesses in court this fall. J&J dismissed the allegations as “junk science that the mass tort plaintiffs bar has funded.”
Goldman Sachs captured investor sentiment in a July 10 report: “Our investor conversations point to some concern about the potentially trickier outlook in the back half of this year given the talc litigation overhang.”
So J&J is riding high on strong earnings and reduced tariff fears. But those legal battles could still derail the momentum. The next few months will be telling.
