Why Johnson & Johnson's Share Price Is Popping This Month

Johnson & Johnson's (NYSE: JNJ) stock price is up more than 7% since the first trading day of November. What's going on with this healthcare giant?

Well, J&J posted strong third-quarter results in mid-October that beat Wall Street's estimates. Sales rose nearly 7% over the same quarter last year, to $24 billion, slightly higher than Wall Street expected. And adjusted earnings per share were up 15.7% to $2.80, three cents higher than the consensus estimate. The company also raised full 2025 guidance on revenue growth slightly to 5.7% over 2024 -- always a good sign of rising management optimism.

And J&J announced it plans to spin off its slow-growing orthopedics group within two years. It will instead focus on its cardiovascular and surgery businesses, both of which have faster growth and higher margins.

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J&J has new cancer drugs potentially coming into its portfolio

Then, on Nov. 17, J&J announced it will acquire Halda Therapeutics, a clinical-stage biotechnology company with a proprietary platform to develop oral, targeted therapies for multiple types of solid tumors, in particular prostate cancer. The deal is for $3.05 billion in cash and is expected to close within the next few months, subject to antitrust clearance and other closing conditions.

The acquisition will broaden J&J's already extensive portfolio of oncology drugs.

Just as important, it will offset some of the competition J&J is facing in its oncology and immunology drugs like Tremfya. Other drugmakers, particularly AbbVie, have similar drugs on the market and have been taking market share from J&J.

J&J also faces the expiration of its patent for immunology drug Stelara. So the company -- like most big pharmaceutical firms -- is urgently seeking to renew its drug pipeline through acquisitions.

The market applauds

There was a very welcome reception by the market to the announcement on Halda. The biotech has a drug in early-stage trials that could treat metastatic prostate cancer, a deadly form of the disease. The drug appears to have the ability to overcome common types of resistance to treatment of prostate cancer with a precision tumor cell-killing approach.

Prostate cancer is the most common cancer diagnosed in men in the U.S. and the second most common cause of cancer deaths in men. New diagnoses are expected to reach 1.7 million globally by 2030.

Halda is also developing treatments for breast and other solid tumors and is exploring therapies for other serious diseases.

In April, J&J completed the acquisition of Intra-Cellular Therapies, which develops neuroscience drugs to treat conditions like schizophrenia and bipolar disorder. The $14.6 billion deal was the biggest acquisition in biotech of the year.

Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.