Johnson & Johnson's (JNJ) Innovative Medicines segment acceleration is helping overcome persistent headwinds in its MedTech business, RBC Capital Markets said in a Tuesday note.

The investment firm said it expects fiscal Q3 sales to come in 1% ahead of estimates, driven by a 1.3% beat in the Innovative Medicines segment anchored by Tremfya, Icotyde, and Darzalex, while projecting EPS of $2.55, below consensus of $2.81. Analysts said the Firefly and Sail deals are not fully reflected in the consensus.

Management noted about 17,000 patients were treated with Icotyde in fiscal Q3, with 60% being treatment-naive and full US insurance coverage achieved, according to the note.

In MedTech, lingering competitive dynamics in electrophysiology and pulsed field ablation, along with persistent geopolitical drag, have softened the H2 recovery thesis, though procedure volumes remain intact, the firm said.

The company is set to report its Q3 financial results on Oct. 13.

RBC Capital Markets maintained its outperform rating on Johnson & Johnson, and raised its price target to $290 from $287.

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