Innovative healthcare stocks to watch in 2025. In this article, we'll see where Johnson & Johnson (NYSE: JNJ) will compete against other innovative medical stocks to watch in 2025.
Medical costs and prices are rising in the US. According to the Centers for Medicare and Medicaid Services, US healthcare costs increased from 7.5% to $4.9 trillion between 2022 and 2023. In 2023, the healthcare industry accounted for 17.6% of the US economy, up 17.4% from 2022.
The impact of tariffs on this ongoing trend is a key skew of competition in the healthcare industry, as more and more US companies rely on China for their next breakthrough chemical agreements, whether in the obesity or cancer sector. Versant Ventures Managing Director Carlo Rizzuto spoke about CNBC's “Fast Money” on February 7th about the impact of tariffs on healthcare. Rizzuto says tariffs could affect the sector in two ways. This is the first product made in China and sold in the US or other countries. The industry needs to see how tariffs are used in the market to understand how they affect such trade operations.
Second, and more precisely, the US medical industry relies heavily on China based on contract production and research. As a result, raising that price will probably make the market even more difficult. Cost hikes don't help manage the healthcare industry, which is already under pressure from investors.
Regarding China's major impact in the pharmaceutical and healthcare sector, Rizzuto said that the majority of healthcare companies use Chinese CROs or manufacturing partners in their capabilities in the research and development stages. As a result, it will have a major impact on how the country's biotechnology and pharmaceutical industry works. This trend is fairly common in businesses of all sizes.
In other words, the lack of infrastructure to promote relocation prevents healthcare companies from repurposing all of their externalized R&D and production to the US. Therefore, it is difficult to imagine how such a large-scale reuse would occur. The amount of tariffs imposed can be used to determine the cost of achieving this objective linearly.
Healthcare EBITDA will rise from a $676 billion starting point in 2023 to $987 billion at 7% CAGR in 2028, according to McKinsey. Despite the expected faster development in some regions, recovery from post-pandemic lows is expected to drive progress in several areas. Software platforms are essential to the healthcare ecosystem as they enable payers and providers to operate more effectively in complex environments.
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By automating procedures, fostering data connectivity and generating actionable insights, technological innovation (such as generator AI and machine learning) continues to provide opportunities for stakeholders across all industry industries. McKinsey predicts that increased utilization and widening pipelines (like cancer) will lead to a significant increase in revenue for special pharmacies. Specialist pharmacy profit pools continue to grow as a result of the increased use of specialist drugs.
This article began by screening iShares US Healthcare ETF (IYH) Top Holdings to focus on prominent companies within the US healthcare sector. From this list, we selected the top 10 holdings based on the weight of our ETF portfolio. We then ranked these stocks according to the number of hedge funds holding each company's position as of Q4 2024, based on data from Insider Monkey's hedge fund tracking database.
Why are hedge funds interested in the stocks they accumulate? The reason is simple. Our research shows that mimic the top stock picks of the best hedge funds can outperform the market. The quarterly newsletter strategy has chosen 14 small and large caps per quarter, returning 373.4% since May 2014, surpassing the benchmark by 218 percentage points (see more here).
Jim Kramer: Johnson & Johnson (JNJ) is “a great American company with an AAA balance sheet.”
A smiling baby with lots of baby care products in the foreground.
Number of hedge fund holders: 98
Johnson & Johnson (NYSE: JNJ) develops, manufactures and sells a wide range of products in the medical field through its subsidiary. The business is divided into two segments: innovative healthcare and MedTech, with a major focus on products related to human health and well-being. Infectious diseases, immunology, neuroscience, metabolic and cardiovascular disorders, pulmonary hypertension, oncology are one of the therapeutic specialties covered by the innovative medical sector. A wide variety of medical devices and products are included in the MedTech section, which are utilized in the fields of cardiovascular intervention, orthopedic surgery, intervention solutions, surgery, and vision.
Johnson & Johnson (NYSE: JNJ)'s foundations are solid. In 2024, it recorded sales of $88.8 billion, up 4.3% from the previous year. The company's high growth strategy is reflected in these impressive results. Cash flow from operations is sufficient to pay high revenue dividends, and its financial sheets are sound.
On January 13, the company announced that it would acquire cells within neurologic drug makers for $14.6 billion. Through this acquisition, the business will have access to Caprita, an oral drug used to treat schizophrenia and bipolar disorder.
Goldman Sachs analyst Assad Haider returned to Johnson & Johnson (NYSE: JNJ) coverage on April 9, achieving his purchase rating and price target of $172.00. Morgan Stanley has raised its price target from $163 to $164 while maintaining a comparable weight rating for the company's stock.
JNJ overall ranks fourth in the innovative healthcare stocks to watch in 2025. While acknowledging the potential of JNJ as an investment, our belief lies in the belief that AI stocks offer higher returns and hold a greater promise to do so within a shorter time frame. There have been AI stocks that have risen since the beginning of 2025, and the popular AI stocks have lost around 25%. If you're looking for AI stocks that are more promising than JNJ, but are trading under five times the revenue, check out this report on the cheapest AI stocks.
Read next: According to the billionaire, buy 20 best AI stocks to buy now and the best best stocks to buy now.
Disclosure: None. This article was originally published on Insider Monkey.
