Johnson & Johnson Stock Price Continues to Climb Despite MedTech Woes
Johnson & Johnson (JNJ) has been on a tear in recent months, with its stock price climbing 56% over the past year. This outperformance has some investors wondering if it's still worth buying into the healthcare giant.
The company's strong sales growth is driven by its Innovative Medicine business, which includes blockbuster cancer drugs like TREMFYA and DARZALEX. These treatments are posting remarkable growth, with TREMFYA delivering 71% sales growth in the most recent quarter.
However, not all segments of JNJ's business are firing on all cylinders. The MedTech division is showing signs of strain, with a 2% decline in sales at Abiomed, which makes heart recovery devices.
The company's strong performance has come at a price, however. The stock now trades at a premium to the S&P 500 median, with a price-to-earnings multiple of 30.0. While this may be justified by JNJ's elite business quality and operating margin of 27%, some investors may view it as a risk.
The ultimate test for investors will be whether JNJ can deliver on its updated forecast for full-year operational sales growth, which is guided at 6.2% to 6.8%. If the company hits this target, it could suggest that the MedTech slowdown is not as significant a problem as some may think.