Johnson & Johnson's JNJ medical devices segment, known as MedTech, offers products in the orthopedics, surgery, cardiovascular and vision markets. The MedTech segment accounts for around 36% of J&J’s total revenues.
In the MedTech segment, though issues in Asia Pacific markets, specifically China, are hurting sales, J&J is successfully shifting its portfolio to high innovation, high growth markets, particularly in Cardiovascular. With the acquisitions of Shockwave in 2024 and Abiomed in 2022, J&J has become a category leader in four of the largest and highest-growth cardiovascular intervention MedTech markets. Sales in its Cardiovascular segment rose 20% in the first half of 2025.
Second-quarter sales in J&J’s MedTech segment improved from first-quarter levels, driven by the newly acquired cardiovascular businesses, Abiomed and Shockwave, as well as growth in Surgical Vision and wound closure within the Surgery division. The MedTech segment is expected to have continued to witness strong momentum in Cardiovascular, Surgery and Vision in the third quarter, backed by increased adoption of newly launched products.
However, the MedTech business continues to face headwinds in the Asia Pacific, particularly in China, where sales are being hurt by the impact of the volume-based procurement (VBP) program. VBP is a government-driven cost containment effort in China.
J&J does not expect any improvement in its business in the Asia Pacific region, specifically in China, in 2025. It expects continued impacts from VBP issues in the country this year as the program continues to expand across provinces and products. Competitive pressure is also hurting sales growth in some MedTech businesses like energy and endocutters in Surgery.
Nonetheless, MedTech sales are expected to be higher in the second half of 2025 than in the first half as the business moves past tougher first-quarter comps and new products gain momentum. However, tariff-related costs are expected to hurt profits in the MedTech segment.
Our estimates for the MedTech unit suggest a CAGR of around 4.6% over the next three years.
J&J’s Key Competitors in the Medical Devices Market
J&J’s MedTech unit faces strong competition from several major players in the medical device industry like Medtronic MDT, Abbott, Stryker SYK and Boston Scientific BSX.
While Medtronic has a strong presence in cardiovascular, neuroscience and surgical technologies, Stryker is a global leader in medical technology, specializing in innovative solutions across surgical, neurotechnology, orthopedics and spine care. Boston Scientific markets products for cardiovascular, endoscopy, urology and neuromodulation. Abbott is known for its medical device products across cardiovascular, diagnostics, and diabetes care.
JNJ’s Price Performance, Valuation and Estimates
J&J’s shares have outperformed the industry year to date. The stock has risen 31.9% in the year-to-date period compared with a 6.4% increase in the industry.
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From a valuation standpoint, J&J is reasonably priced. Going by the price/earnings ratio, the company’s shares currently trade at 16.93 forward earnings, higher than 15.70 for the industry. The stock is also trading above its five-year mean of 15.64.
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The Zacks Consensus Estimate for 2025 earnings has remained unchanged at $10.86 per share, while that for 2026 has risen from $11.36 to $11.38 over the past 60 days.
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J&J has a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
