Johnson & Johnson JNJ reported stronger-than-expected first-quarter 2025 results. The world's biggest healthcare products maker continued with its long streak of earnings beat and also exceeded revenue estimates. It raised its revenue guidance for this year amid tariff chaos and boosted its quarterly dividends.

Given the resilience of the drugmaker amid the potential tariff shifts under the Trump administration, investors should tap the company’s growth prospects through ETFs with the largest allocation to this diversified drug maker. These include iShares U.S. Pharmaceuticals ETF IHE, iShares U.S. Healthcare ETF IYH, First Trust Nasdaq Pharmaceuticals ETF FTXH, Health Care Select Sector SPDR Fund XLV and VanEck Vectors Pharmaceutical ETF PPH.

JNJ’s first-quarter earnings per share came in at $2.77, which beat the Zacks Consensus Estimate of $2.57 and improved 2.2% from the year-ago earnings. Revenues grew 2.4% year over year to $21.89 billion and outpaced the Zacks Consensus Estimate of $21.62 billion (see: all the Healthcare ETFs here).

Innovative Medicines sales advanced 4.2%, while sales from MedTech devices jumped 4.1%. Sales of JNJ’s top-selling blood cancer treatment, Darzalex, jumped 20% to $3.2 billion, while Xarelto generated $690 million in sales, up 33% year over year. However, sales of the blockbuster psoriasis drug Stelara declined 34% to $1.6 billion due to the launch of several biosimilar versions entering the market. Invega Sustenna sales also dropped 15% to $903 million.

Johnson & Johnson raised its revenue guidance for fiscal 2025 to $91.0-$91.8 billion from $89.2-$90.0 billion, indicating year-over-year growth of 2.6%-3.6% versus the prior expectation of 0.5%-1.5%. The new guidance reflects the addition of Caplyta (lumateperone) following its $14.6 billion acquisition of Intra-Cellular Therapies. The company maintained its adjusted earnings per share guidance in the range of $10.50-$10.70 due to tariff costs, dilution from the Intra-Cellular Therapies acquisition, and updated foreign exchange. JNJ revealed tariff costs of roughly $400 million this year.

The drugmaker lifted its quarterly dividend to $1.30 per share from $1.24 per share, marking the 63rd year of consecutive increases. At the new rate, the annual dividend comes to $5.20 per share compared with the previous rate of $4.96 per share.

ETFs in Focus

iShares U.S. Pharmaceuticals ETF (IHE)

iShares U.S. Pharmaceuticals ETF provides exposure to 37 companies that manufacture prescription or over-the-counter drugs or vaccines by tracking the Dow Jones U.S. Select Pharmaceuticals Index. Of these, Johnson and Johnson takes the top spot, accounting for a 24.5% share. 

iShares U.S. Pharmaceuticals ETF has $533.7 million in AUM and charges 39 bps in fees and expenses. Volume is good at about 135,000 shares a day. The fund has a Zacks ETF Rank #3 (Hold) with a High risk outlook.

iShares U.S. Healthcare ETF (IYH)

iShares U.S. Healthcare ETF offers exposure to 104 U.S. healthcare equipment and services, pharmaceuticals, and biotechnology companies by tracking the Russell 1000 Health Care RIC 22.5/45 Capped Gross Index. Johnson and Johnson is the third firm, accounting for 7.2% of the total assets. In terms of industrial exposure, pharma takes the top spot at 29.3%, followed by healthcare equipment (21.7%) and biotech (18.5%). 

iShares U.S. Healthcare ETF has amassed $3 billion in its asset base while charging 39 bps in annual fees. It trades in a good volume of around 384,000 shares a day and has a Zacks ETF Rank #3 with a Medium risk outlook (read: Recession Fears Looming? Secure Your Portfolio With These ETFs). 

First Trust Nasdaq Pharmaceuticals ETF (FTXH)

First Trust Nasdaq Pharmaceuticals ETF offers exposure to U.S. companies within the pharmaceuticals industry and tracks the Nasdaq US Smart Pharmaceuticals Index. It holds 50 securities in its basket, with JNJ occupying the top spot at 7.8% of the assets. FTXH has a lower AUM of $13.2 million and an average daily volume of 3,000 shares. 

First Trust Nasdaq Pharmaceuticals ETF charges 60 bps in annual fees and has a Zacks ETF Rank #3.

Health Care Select Sector SPDR Fund (XLV)

Health Care Select Sector SPDR Fund is the most popular healthcare ETF and follows the Health Care Select Sector Index. It holds 60 securities in its basket, with JNJ taking the third spot at 7.4% of the assets. Pharma, healthcare providers and services, and healthcare equipment & supplies take the largest share at 29.2%, 23.7% and 22%, respectively. 

Health Care Select Sector SPDR Fund manages $35.4 billion in its asset base and trades in a heavy volume of around 12 million shares. The expense ratio comes in at 0.08%. It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: 5 Sector ETFs Set for Q1 Earnings Growth Amid Tariff Woes).

VanEck Vectors Pharmaceutical ETF (PPH)

VanEck Vectors Pharmaceutical ETF follows the MVIS US Listed Pharmaceutical 25 Index, which measures the performance of companies involved in pharmaceuticals, including pharmaceutical research and development as well as production, marketing and sales of pharmaceuticals. It holds 26 stocks in its basket, with Johnson and Johnson occupying the second position at 6.7% of assets. 

VanEck Vectors Pharmaceutical ETF has amassed $586 million in its asset base and trades in a good volume of about 330,000 shares a day. The expense ratio is 0.36%. VanEck Vectors Pharmaceutical ETF has a Zacks ETF Rank #3 with a Medium risk outlook.

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Johnson & Johnson (JNJ) : Free Stock Analysis Report

Health Care Select Sector SPDR ETF (XLV): ETF Research Reports

iShares U.S. Healthcare ETF (IYH): ETF Research Reports

iShares U.S. Pharmaceuticals ETF (IHE): ETF Research Reports

VanEck Pharmaceutical ETF (PPH): ETF Research Reports

First Trust NASDAQ Pharmaceuticals ETF (FTXH): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

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