We are exiting our position in Bristol Myers Squibb , selling 1,100 shares at roughly $58.94. In addition, we are initiating a new position in Johnson & Johnson , buying 150 shares at roughly $237.65. Following the two trades, Jim Cramer’s Charitable Trust will no longer own a position in BMY and will own 145 shares of JNJ, representing about 1% of the portfolio. We’re making a pharmaceutical swap Wednesday. We’re hanging onto a small gain of 3.5% in what’s left of our Bristol Myers position, and we don’t want to stick around and risk turning into a loss. Bristol Myers had a disappointing first 10 months of 2025, dragged down by pharmaceutical-tariff worries and a missed late-stage Cobenfy trial evaluating its use as an adjunctive treatment for atypical antipsychotics in adults with schizophrenia. But the stock has come alive over the last six months, rallying roughly 30% as tariffs threats eased and investors looked beyond Cobenfy in the pipeline. Bristol Myers has several key pipeline readouts expected this year, and the success of these trials will be critical to navigating its upcoming patent cliff. We’re not making a call on any individual outcome; instead, we prefer to focus on commercial excellence rather than binary events. Which brings us to Johnson & Johnson, which had been in our Bullpen watchlist. Bristol Myers has held a slight edge over the past six months, with its roughly 30% gain outpacing Johnson & Johnson’s 25% return over the same period. So, it’s been right to hang onto Bristol Myers during this period. However, the longer-term picture favors J & J, which has rallied about 58% over the past year compared with Bristol Myers’ more modest 10% advance. J & J generated about $94 billion in sales in 2025, with roughly two-thirds coming from its pharmaceutical division, known as Innovative Medicines, and the other third from its medical products segment, known as MedTech. Innovative Medicines sales increased 5.3% year over year in 2025, driven by double-digit growth in 13 brands. The main focus here is in Oncology, where it has a strong multiple myeloma portfolio through drugs Darzalex, Tecvayli, and Carvykti. Oncology delivered about $25 billion in sales in 2025, and management expects this franchise will exceed $50 billion in annual sales by 2030. Immunology, led by drugs like Tremfya, and Neuroscience are also key areas of focus. The MedTech unit grew revenue by 5.4% last year, with its primary focus on Cardiovascular, Surgery, and Vision segments. We should also note that Johnson & Johnson may have a valid competitor to Cobenfy. In January 2025, it paid $14.6 billion to acquire Intra-Cellular Therapies and its lead asset Caplyta. The drug is approved for the treatment of schizophrenia and bipolar depression, and in November, its label was expanded to treat major depressive disorder. J & also has a robust pipeline. Last month, the Food and Drug Administration approved Icotyde , an IL-23 (interleukin-23) receptor antagonist for the treatment of moderate-to-severe plaque psoriasis in adults and children 12 and older. Importantly, Icotyde is the first oral IL-23 inhibitor for this autoimmune condition. This puts J & J in a position to take significant market share from existing oral treatments for psoriasis, such as Amgen’s Otezla and Bristol’s Sotyktu, which use different mechanisms of action to treat the disease than Icotyde. Last fall, before its FDA approval, Icotyde delivered better skin clearance than Sotyktu in head-to-head trials . Additionally, Icotyde could also end up taking share from injectable IL-23 inhibitors, such as Abbvie’s Skyrizi. In some irony, one of the key drugs in Bristol’s pipeline we alluded to earlier is being co-developed through a partnership with Johnson & Johnson. The medicine is Milvexian, and it’s being studied in secondary stroke prevention and atrial fibrillation. A win here will benefit Bristol Myers more than Johnson & Johnson simply because of the difference in sizes of the two companies, but it’s still a meaningful positive for J & J. We are also fans of Johnson and Johnson’s ongoing portfolio transformation. It started in 2023, when J & J spun off its consumer-health division into the company now known as Kenvue . It took some time, but shedding the parent company of Tylenol and Band-Aid to focus more on its faster-growing Innovative Medicine and its MedTech segments resulted in J & J shares fetching a higher price-to-earnings multiple in the market. The second part of the Johnson & Johnson makeover was announced in October, when it said it plans to separate its Orthopaedics business, called DePuy Synthes. Similar to Kenvue, this separation will allow management to increase its focus on faster-growing, higher-margin markets within its MedTech segment. Management also expects the separation will increase the company’s top-line growth and operating margins, which we believe will drive a further positive re-rerating in J & J’s P/E multiple. When the separation was announced, management was targeting a completion within 18 to 24 months – so there’s still plenty of time before it actually happens. It’s unclear if DePuy will be separated by a spin-off or outright sale. Reuters reported in February that J & J was exploring selling the division to a private-equity buyer for up to $20 billion. Finally, we will address its legal headwind, the baby powder saga that plagued our investment in the company when we last owned it in 2023. Thankfully, this has started to fade away. At some point, the company changed its legal strategy toward fighting cases individually instead of trying to settle all of its cases in one fell swoop. They still get a loss here and there, but the stock is no longer hanging on each and every bit of news concerning those lawsuits. Johnson & Johnson has had a good run in 2026, rallying about 14%. It’s sitting out the market rally on Wednesday because it traded resiliently throughout the war in the Middle East. That makes sense- investors are grabbing the names that have been beaten down because of rising oil prices and geopolitical tensions. Remember, this swap isn’t about the war; it’s upgrading the portfolio pharma exposure to a company with a stronger track record of commercial excellence. You may also notice that the sale of Bristol Myers is much larger than the purchase we’re making in J & J. This is intentional. With earnings on the horizon, we want to leave plenty of room to scale into J & J over time. Also, given the relief rally in the market Wednesday, we like the idea of taking advantage of strength to pocket some extra cash. We are initiating the J & J position with a price target of $265, which represents about 23 times the midpoint of the company’s 2026 adjusted earnings per share forecast. (Jim Cramer’s Charitable Trust is long JNJ. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . 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We’re exiting our position in a drug stock and initiating a stake in a more attractive rival
