Johnson & Johnson Faces Pressure to Deliver After Talc Setback, But Long-Term Growth Still Intact

UBS reaffirmed its Buy rating on Johnson & Johnson (NYSE:JNJ) and maintained a $180 price target, but highlighted short-term volatility risks following the latest legal setback in the company’s ongoing talc litigation saga.

A recent court decision marked the third rejection of J&J’s attempt to use bankruptcy proceedings as a pathway to resolve current and future talc-related lawsuits — despite reportedly having over 75% support from claimants. UBS notes that this has significantly dented investor sentiment, and with first-quarter earnings around the corner, anything less than strong execution could trigger disproportionate market reaction.

Still, analysts at UBS remain confident in the company’s fundamentals for 2025, pointing to steady performance as it navigates the loss of exclusivity on Stelara, a key immunology drug. They also cite the positive contribution from the recently closed acquisition of Intra-Cellular Therapies (ITCI) as a potential growth driver.

A key area of investor focus this quarter will be the impact of Medicare Part D redesign, which introduces new cost-sharing dynamics. UBS flagged that consensus estimates may still be misaligned on the earnings implications for certain J&J drugs.

Despite this near-term uncertainty, the performance of Tremfya is providing optimism. The psoriasis and inflammatory bowel disease drug saw 14% quarter-over-quarter growth in total prescriptions, bolstered by its ulcerative colitis (UC) launch. UBS anticipates further upside as Tremfya pushes into Crohn’s disease (CD) with a unique subcutaneous-only dosing regimen, which differentiates it from rivals.

While short-term sentiment may hinge on the upcoming earnings call, UBS believes that J&J’s broad pipeline, ongoing innovation, and defensive business mix keep it well positioned for longer-term upside.