You probably know Johnson & Johnson (JNJ -0.42%) very well, thanks to the Band-Aid bandages and Tylenol that may be sitting in your medicine cabinet. But those products that made J&J famous actually are no longer part of the business. That's because J&J recently spun off its consumer health unit into a new company called Kenvue.

This leaves J&J with the two main businesses of pharmaceuticals and medtech. The transition prompted J&J to lower its sales and earnings per share guidance for the year to account for the lost consumer health earnings. There's been a lot of talk about buying J&J as it heads into a new era of growth -- but the revised earnings forecast may make you think twice. Is J&J really a buy after the Kenvue separation? Let's find out.

The consumer health unit

First, let's examine J&J's performance with the consumer health unit. Yes, that business is filled with star products that most of us use, but it has been a drag on J&J's annual growth. We'll take a look at last year's earnings as an example. While the pharmaceutical and medtech businesses each grew sales on an adjusted operational basis by more than 6%, consumer health sales rose less than 4%.

Consumer health also has represented a much smaller share of sales. Last year, it brought in about $14 billion, while pharmaceuticals and medtech generated $52 billion and $27 billion, respectively.

Removing consumer health from the mix offers J&J two big advantages. It cuts a slow-growing business from earnings calculations and allows sales growth to come in higher. And even more importantly, it provides J&J with more resources to invest in its higher-growth businesses. That's because, instead of continuing to invest in consumer health, J&J now can direct all of the investment into pharmaceuticals and medtech.

Speaking of resources, the actual Kenvue operation itself generated proceeds of more than $13 billion for J&J, a considerable sum the company could use to boost the internal pipeline or for growth through collaborations and acquisitions. J&J, after mentioning its "voracious" appetite for business deals during the latest earnings call, noted that "external innovation" comprises about half of the pipeline.

The purchase of heart pump specialist Abiomed last year is a great example of how J&J is winning through acquisitions. The deal added a 12th platform to J&J's medtech portfolio that generates annual sales of more than $1 billion. In the most recent quarter, Abiomed's sales rose in the double digits.

New sales and EPS guidance

Now, let's consider the immediate impact of the Kenvue spinoff. The midpoint of J&J's new full-year sales guidance, excluding consumer health, is $83.6 billion. That's compared to a midpoint of $99.3 billion in the previous forecast, which included the consumer health unit. And the earnings midpoint declined to $9.95 per share from $10.65. That's on an adjusted operational basis.

Meanwhile, the spinoff decreased J&J's outstanding share count by more than 190 million. A lower share count generally helps a company increase its earnings per share, which is a positive move. It's also important to remember that J&J still holds a 9.5% equity stake in Kenvue, meaning it will benefit from Kenvue's potential successes.

So, back to our question: Is J&J a buy after the Kenvue separation, even if earnings forecasts have declined? Actually, now is a great time to get in on this big pharma stock. The shares have fallen about 9% this year, leaving J&J trading at about 16 times forward earnings estimates. That's down from around 18 earlier in the year. This looks like a reasonable price considering J&J's new focus on its most promising businesses as well as the resources it has to pour into growth. And despite dropping consumer health, J&J could still benefit a little from Kenvue's earnings without the expenses hitting its bottom line. That's why I wouldn't worry about the initial impact of the Kenvue separation, and instead, I would look ahead to what seems to be a bright future.