Why Johnson & Johnson Stock Defied the Market Downturn Today

What happened

Shares of Johnson & Johnson (NYSE: JNJ) defied the overall market downturn on Thursday, with its shares rising 1.7% higher as of the market close. The big company didn't make any announcements nor were there any other big stories that served as a catalyst. Instead, investors appeared to favor relatively stable stocks such as J&J on a day when small-cap and tech stocks took a drubbing.

So what

After today's gain, J&J's shares are still down around 2.5% year to date. However, that's much better than the S&P 500's nearly 21% decline.

It's not surprising that blue-chip stocks are outperforming the market in 2022, or that J&J rose today while many stocks fell. Investors are more appreciative of the financial stability of the healthcare giant during periods of volatility.

To be sure, J&J's financial results haven't been anything to get excited about. The company's reported sales in the second quarter increased by only 3% year over year with its net earnings tumbling 23.3%. But the strong U.S. dollar has presented a significant headwind for J&J, which generates a little under half of its total revenue in international markets.

On an operational basis (which excludes the impact of currency fluctuations), J&J's performance looks much better. The company posted Q2 operational sales growth of 8% compared to the prior-year period. Its adjusted net earnings (which exclude intangible amortization expense and special items) jumped 4.3% year over year.

Now what

The future should look even brighter for J&J. The company plans to spin off its consumer health unit next year. That move will leave Johnson & Johnson with its faster-growing pharmaceutical and medtech businesses.

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Keith Speights has no position in any of the stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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