As Wall Street navigates a jam-packed start to earnings season, CNBC’s Jim Cramer explained what made shares of Johnson & Johnson rise after the company posted its quarterly report.
“Sometimes in this game, you do just get lucky,” he said. “You’ll come across a surprise quarter that tells you everything you need to know about what can cause a big cap stock to rally ten points in a session. You’ll see how a star is born and even get a blueprint for what you need, what you should be looking for.”
Stock of the pharmaceutical giant climbed more than 6% during Wednesday’s session after it beat on earnings and revenue. Cramer said the “storied company” has been weighed down for years by ongoing lawsuits that allege its talc products cause cancer.
According to Cramer, it took “many surprises” to spur Johnson & Johnson’s gains. He told investors it’s worthwhile to review an “earnings scorecard slash schematic of what a winner looks like.”
Some fundamental data from the quarter helped fuel Johnson & Johnson’s rally, Cramer said. The company beat on earnings and sales, and it managed to significantly raise guidance for both metrics. He also said pharma names like Johnson & Johnson need to relay breakthroughs in research — and the drug maker was able to share promising results from one of its newer cancer treatments.
Right now, good news on the tariff front is attractive to investors, Cramer continued. He pointed out that Johnson & Johnson was able to cut its previous estimates for costs related to the new duties. Wall Street also appreciates when a new quarter shows that a previous issue has been remedied, Cramer said. Johnson & Johnson’s med-tech division dragged shares down after the last quarter, he suggested. But this time, he said, the business didn’t disappoint.
Johnson & Johnson also impressed Wall Street with projections for the future, Cramer added, highlighting management’s lofty assertion on the call that it would be “the number one oncology company by 2030 with sales of more than $50 billion.” Cramer noted that the company announced a breakthrough in bladder cancer treatment that could be worth $5 billion in peak sales.
“Check your stocks. Do they have a chance to change their stripes like J&J? Do they fit the formula?” he asked. “Then, you know what, you may be just sitting on – say it with me – a gold mine.”
Johnson & Johnson pointed CNBC to CFO Joe Wolk’s comments in a Wednesday interview.
“You know, I’m encouraged for really the balance of the year as we raised our guidance substantially,” Wolk told CNBC. “But what’s happened clinically in our pipeline really gives me a lot of enthusiasm and bullishness for what’s going to happen for the balance of this decade. 25 shaped up to be better than what we thought and we expect 26 to better than 25, 27 to be better than 26.”
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