Pharmaceuticals: Major · #48 in the Retail 100

Johnson & Johnson

JNJ

Our rating: hold
12-month target: $292.70 +10.0%
Expected vs. S&P 500: -6.5 ptsSee the math
Next earnings: Jan 26In 82 daysEarnings calls page ↗

Tremfya, up 68%, has replaced Stelara's lost sales, but J&J faces another $4–4.5B of patent losses next year.

Summary

Johnson & Johnson gets about two-thirds of its sales from prescription drugs and a third from medical devices. Newer drugs are covering the loss of Stelara, once its top immunology drug, and J&J now expects about $101 billion of sales this year. But devices are lagging and more drug patents expire next year. The stock depends on 2027 earnings holding up through those patent losses.

$266.17

+$72.45 (+37.40%)Past year

What Johnson & Johnson does

J&J earns two-thirds of its sales from patented drugs and a third from hospital medical devices. Drug patents expire, so it must keep replacing its best sellers, as it did when Stelara lost protection.^31,13

What it sells

Medical devices36% of revenue, FY2025
Heart-rhythm tools and heart pumps, joint replacements, surgical staplers and Acuvue contact lenses. J&J plans to separate the orthopaedics business.
Cancer drugs27% of revenue, FY2025
Led by Darzalex for myeloma, a blood cancer. At $14.4 billion in 2025, it is J&J's largest product.
Other medicines20% of revenue, FY2025
Drugs for schizophrenia and depression, high blood pressure in the lungs, HIV, and blood clots through Xarelto.
Immunology drugs17% of revenue, FY2025
Treat psoriasis and bowel disease. Stelara sales fell 41% in 2025 as cheaper copies arrived, and Tremfya is taking its place.

Who buys it

Doctors and hospitals choose J&J's products, but three wholesalers handled about 48% of gross sales in 2025 and pass them on to pharmacies and hospitals. The U.S. was 57% of sales, and U.S. insurers and government programs take large rebates on drug prices.

Where you've seen it

Acuvue contact lenses are J&J's, and its staplers and stitches are used in many surgeries.

The backstory

J&J split off its consumer brands as Kenvue in August 2023 to focus on drugs and devices. Then its biggest drug, Stelara, lost U.S. exclusivity, and cheaper copies cut its sales by about 40% in 2025. CEO Joaquin Duato responded by building up newer drugs, buying Intra-Cellular and planning to separate the slower orthopaedics business.

How the business makes money

Why J&J must keep replacing its best-selling drugs^{1,2,7,8,10,11,14,31,29,32,35}

Step 1
Patented drugs bring in two-thirds of J&J's sales. Patents expire, and cheaper copies cut Stelara's sales by about 40% in 2025.
Step 2
Newer drugs fill the gap. Darzalex for blood cancer sold $4.2 billion last quarter, and J&J buys companies like Intra-Cellular for more.
Step 3
Hospital devices add steadier, slower-growing sales: $33.8 billion in 2025.
Step 4
About $15.1 billion of cash was left in the first nine months after running costs and investment, by J&J's estimate. It pays for research and deals.
What shareholders get
Shareholders get a dividend that J&J raises every year.

Advantages

Several big, growing drugs

Major advantage

J&J's biggest advantage. Several big drugs grow at double-digit rates, so one patent loss hurts less. Darzalex alone sold $4.2 billion last quarter.³³

A large devices business

Strong advantage

A real cushion, though slow-growing. MedTech brought in $33.8 billion in 2025, a second large source of cash that pure drugmakers lack.^13,32

Cash to buy new drugs

Strong advantage

Ample firepower for deals. J&J paid about $14.5 billion for Intra-Cellular, bought Firefly Bio in July, and still raises its dividend every year.^14,11,26

What's changing

J&J beat on earnings, but devices lag and 2027 is unclear

J&J's drugs are doing their job, but the rest is shakier. On results day it raised 2026 earnings guidance to $11.10 a share, yet the stock fell 5.7% as devices disappointed. The talc charge cut reported earnings to just $0.09 a share. J&J has given no formal 2027 outlook and will give detail at a December 8 business review.^{32,35,1,10,26}

Competitors

Who else an investor would consider, and how they compare.

Company	Market value	What it does	Compared with Johnson & Johnson
Johnson & Johnsonthis stock	$640.78B	J&J earns two-thirds of its sales from patented drugs and a third from hospital medical devices. Drug patents expire, so it must keep replacing its best sellers, as it did when Stelara lost protection.
AbbVieABBV	$506.92B	Pure drugmaker focused on immunology, now selling Skyrizi and Rinvoq after Humira.	AbbVie is all drugs; J&J also owns a big medical devices business.
MerckMRK	$346.86B	Drugmaker whose profit relies heavily on Keytruda, a cancer drug losing patents from 2028.	Merck's patent cliff is still ahead; J&J's is behind it.
Eli LillyLLY	$1.20T	Drugmaker growing fast on obesity and diabetes drugs like Mounjaro and Zepbound.	Lilly has obesity drugs and faster growth; J&J has none, but a cheaper stock.
MedtronicMDT	$121.24B	Sells only medical devices, mainly to hospitals: heart, surgery and spine products.	Medtronic is devices only; J&J pairs devices with drugs. Both fight in heart rhythm.
Abbott LaboratoriesABT	$181.48B	Mixes medical devices, diagnostic tests and nutrition products like Ensure.	Abbott overlaps mainly in heart devices; J&J's profit leans on patented drugs.

Leadership

Who runs the company, and how the stock has done under the CEO.

JNJ +77.3%S&P 500 +68.2%Total return with dividends since Jan 2022

2023202420252026

Joaquin DuatoChairman and CEO4.7 yrs

Joseph J. WolkEVP, CFO8.3 yrs, since 2018

Tom CavanaughEVP, Worldwide Chairman, Innovative Med…2 mo

Tim SchmidEVP, Worldwide Chairman, MedTech3 yrs

John C. ReedEVP, Innovative Medicine, R&D3.5 yrs

When Duato was named (Aug 2021), the stock moved +0.5% that day; the S&P 500 moved +0.8%.

Wall Street on Duato: PositiveFreedom Capital upgraded the stock to Buy as sales of Tremfya and Caplyta, a drug gained in the Intra-Cellular deal, beat its forecasts. BofA rates it a Hold, noting deal-related research charges cut 2026 profit by $0.64 a share.^L7,L8

Leadership sources (8) · researched Oct 2026

L1J&J names Joaquin Duato as CEO effective Jan. 3, replacing Alex Gorsky · CNBC, 2021-08-19
L2Johnson & Johnson Leadership · Johnson & Johnson, 2026-10-11
L3Johnson and Johnson CFO Dominic Caruso to retire in September, to be replaced by Joseph Wolk · CNBC, 2018-03-20
L4Johnson & Johnson's Executive Vice President Jennifer Taubert to Retire; Tom Cavanaugh Appointed EVP, Worldwide Chairman Innovative Medicine Effective September 1 · Johnson & Johnson, 2026-08-04
L5Johnson & Johnson Announces Departure of Ashley McEvoy; Tim Schmid Named Executive Vice President, Worldwide Chairman of MedTech · Johnson & Johnson, 2023-10-23
L6Johnson & Johnson Appoints Dr. John Reed as Executive Vice President, Pharmaceuticals, R&D · Johnson & Johnson / Business Wire, 2023-02-13
L7UBS raises Johnson & Johnson stock price target to $320 on outlook · Investing.com, 2026-09-02
L8BofA raises Johnson & Johnson stock price target on Icotyde outlook · Investing.com, 2026-09-29

Bull vs. bear: two bets on the same stock

1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
3
When results come in, the price moves toward whichever side was right, and that side makes money.

The question they disagree on

Can J&J reach analysts' 2027 estimate of about $11.73 in adjusted earnings per share, which includes some of the $1.36 a share of deal costs, despite new patent losses?^{32,33,34,35,36,4,5,10,30,26,27}

Bull case: why buyers buy

New drugs keep growing faster than older ones lose patents, and devices recover as orthopaedics is separated, so earnings grow faster than sales once deal costs pass.

Newer drugs are more than replacing Stelara. Darzalex grew 15.4% last quarter, and together with Tremfya it more than covered Stelara's decline.
Profit should grow faster than sales in 2027. That is the view of finance chief Joseph Wolk, setting aside deal costs.
The talc settlement looks on track. Management says it is trending toward the 95% of claimants needed for the deal to take effect.
Devices have new growth products. Shockwave heart-device sales grew 17.2%, and the FDA authorized the OTTAVA surgical robot.

Bear case: why sellers sell

If device growth stays near 2.5% and 2027 patent losses and deal costs hit harder than expected, earnings growth stays low and the valuation drifts back toward 16 times.

Devices are growing below J&J's own standard. Abiomed and surgery sales both fell last quarter, hurt partly by China purchasing rules and Middle East disruption.
Profit fell last quarter. Adjusted earnings per share dropped 7.5% from a year earlier as margins narrowed.
Analysts are cutting forecasts, but the stock is not cheap. It trades near 21 times expected earnings, well above its usual level of the past five years.
Big patent losses arrive next year. Products with $4 billion to $4.5 billion of sales lose exclusivity in 2027, including Xarelto.

Where Delphi landsholdWe think today's price already weighs both sides fairly.See why

What to watch

The numbers that will settle the debate.

Tremfya sales▲ improving

$2.4 billion in the third quarter, up 68.3% from a year earlier.³³

Tremfya is J&J's main replacement for Stelara in immunology.

MedTech sales growth excluding currency▼ worsening

2.5% in the third quarter, with Abiomed and surgery both shrinking.^32,33,35

Devices are about a third of sales, so slow growth there limits total earnings growth.

2027 adjusted earnings per share estimate▼ worsening

$11.73 as of October 14, down from $12.22 a week earlier and $12.81 three months ago.³⁶

Shows whether growth can support today's price.

Next earnings report

Jan 26

In 82 days

Earnings calls page ↗

Expected earnings per share: $2.91
Expected revenue: $26.41B

What to listen for: Whether device growth recovers from 2.5%, and what J&J says about 2027 growth, including $1.36 a share of deal costs, at its December 8 business review.^40,18

What would prove this wrong

✕Tremfya growth slows below 30% before Stelara stops shrinking.
✕MedTech growth stays below 4% after the orthopaedics separation.
✕The talc settlement fails to reach 95% participation.
✕J&J's 2027 guidance, before Sail deal charges, implies earnings growth well below 8%.

Our ratingHoldas of Nov 3 close, $266.17 · what ratings mean

New drugs keep earnings growing, but at 21 times expected earnings, against a five-year norm near 16, and with 2027 estimates falling, the stock likely trails the S&P 500.

12-month target: $292.70 (+10.0%)
Plus dividend: +1.9%
S&P 500, same method, with dividends: +18.5%
Expected vs the market: -6.5 points

The math behind the recommendation

Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.

Now $266.17

Target $292.70

bull case25% likely

$367.42 +38%

Tremfya and cancer drugs keep growing double digits and devices recover as orthopaedics is separated, lifting earnings to the high end of estimates.

$13.90 earnings per share × 26.4 = $367.42

base case50% likely

$279.38 +5%

Earnings grow as analysts expect, but the stock's valuation moves partway back toward J&J's usual level of about 16 times earnings.

$13.19 earnings per share × 21.2 = $279.38

bear case25% likely

$244.61 -8%

Device growth stays near 2.5% while 2027 patent losses and deal costs weigh, leaving earnings near the low end of estimates.

$12.84 earnings per share × 19.1 = $244.61

Why these odds: J&J beat estimates again and raised 2026 guidance, but analysts cut the 2027 estimate from $12.22 to $11.73 in a week, devices grew 2.5%, and margins fell. 2028 is extended from 2027 using MarketScreener's implied growth of 16.5%.

How the prices are built: Wall Street expects earnings per share of $13.19 for the year starting a year from now (analysts range from $12.48 to $14.61). Today the stock trades at 23 times next year's earnings per share; its five-year middle is 15.77.^{32,33,35,36,37,38,39,40,18,27}

What tests the call: Q4 2026 earnings (date projected) (Jan 25)

Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 14; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record

What the price assumes

At $266.17, investors pay 23% more than they pay for the average stock's earnings

Johnson & Johnson trades at 23 times the earnings analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's earnings. That is pricier than it has been 80% of the time over the past five years, when the middle was 16.

Analysts expect earnings to grow about 14% the year after, against about 16% for the S&P 500. The S&P 500 trades at 19 times. Johnson & Johnson's earnings are expected to grow slower than the market's, so the premium has to rest on something other than growth, such as how dependable those earnings are.

Johnson & Johnson multiple: 23×
S&P 500 multiple: 19×
Base case: +5%
Bear case: −8%

The skewOur bear case loses about $1.63 for every $1 our base case makes. That ratio, how much you stand to lose against how much you stand to make, is the skew.

Last earnings

No reported quarters available.