Johnson & Johnson (JNJ -0.63%) is no longer the same company that investors have known for decades. All of the consumer healthcare products that helped make J&J successful through the years -- Band-Aid, Benadryl, Listerine, Tylenol, and more -- aren't in the company's product lineup anymore. They all went out the door with Kenvue (KVUE -0.13%) after Johnson & Johnson spun off its consumer health unit in August 2023. 

On Tuesday, Johnson & Johnson announced its first quarterly earnings results after the separation from Kenvue. The healthcare giant didn't disappoint, easily beating Wall Street's expectations and even boosting its full-year sales and earnings guidance. Is the "new" Johnson & Johnson stock a buy with its improved profit outlook?

Plenty of positives for the "new" J&J

One of the main reasons Johnson & Johnson chose to spin off its consumer health unit was to be able to focus on its faster-growing pharmaceuticals and medical device businesses. Both remaining businesses provided some good news to investors in the third quarter of 2023.

J&J's medtech segment led the way, with sales jumping 10% year over year to nearly $7.5 billion in Q3. The acquisition of heart-recovery device maker Abiomed in December 2022 accounted for 4.6% of this solid growth. Solid performances for electrophysiology products, wound closure products, contact lenses, and biosurgery solutions also helped.

Sales for the innovative medicine segment rose 5.1% year over year to $13.9 billion. This growth was driven largely by immunology drugs Stelara and Tremfya، and cancer drugs Darzalex and Erleada. New multiple myeloma drug Carvykti also picked up significant additional momentum in Q3.

Thanks to its better-than-expected Q3 results, Johnson & Johnson raised its full-year sales forecast to a range of $83.6 billion to $84 billion, up $200 million from the outlook in August 2023 and reflecting 7.7% year-over-year growth at the midpoint of the range. The company also upped its adjusted earnings-per-share (EPS) guidance to a range of $10.07 to $10.13. This was a $0.05 increase from the projection in August and is 13% above last year's adjusted EPS.

Several warning signs, too

Not everything appears so shiny with the "new" J&J. There are several warning signs, too.

Some of the problems were readily apparent in the company's Q3 update. Sales for multiple products declined significantly in the quarter, including Remicade, J&J's COVID-19 vaccine, Imbruvica, and Zytiga.

As we've already seen, the growth for J&J's medtech segment was driven largely by the Abiomed acquisition. There aren't any other major business development deals in view that would provide such a major growth catalyst anytime soon.

Stelara faces biosimilar competition in the U.S. beginning in 2025. With a key patent expiring next year, European sales for the drug could begin to fall by mid-2024. This isn't a minor issue: Stelara made up nearly 21% of J&J's innovative medicine-segment revenue in Q3.

Johnson & Johnson could also be at the most risk with the first-ever price negotiations with Medicare. There are 10 high-cost drugs that Medicare will negotiate with biopharmaceutical companies with the goal of securing lower prices. Two of them are J&J's drugs -- Stelara and Xarelto. A third drug, Imbruvica, is co-marketed by J&J and its partner, AbbVie.

Is the "new" Johnson & Johnson stock a buy?

It's likely that the "new" Johnson & Johnson will deliver stronger growth going forward than it would have if the Kenvue spin-off had not been done. However, this stock won't be one that most growth-oriented investors will find especially attractive.

But the same reasons that investors have liked the "old" J&J for years still apply to the current version of the stock. Importantly, Johnson & Johnson remains a Dividend King with a solid dividend yield of over 3%.

The company's business should continue to be resilient. Even with the coming challenges related to Stelara's loss of exclusivity and Medicare negotiations, J&J should be fine overall. It has a robust pipeline that features 39 programs in late-stage testing plus another 14 awaiting regulatory approval decisions. 

Is the "new" J&J stock a buy? If you're a conservative investor with a long-term perspective, I think the answer is "yes."