J&J Shares Slip as Strong 2026 Forecast Fails to Sway Wary Investors
Robust sales in MedTech and a revenue beat were overshadowed by concerns over the looming patent expiration for blockbuster drug Stelara and persistent litigation risks.
Johnson & Johnson (JNJ) presented a bullish outlook for its future on Tuesday, beating quarterly revenue estimates and issuing strong sales guidance for 2026. The optimistic forecast, however, was not enough to quell investor anxiety, as shares slipped in morning trading while the market focused on future threats to the healthcare giant’s portfolio.
The company’s stock fell as much as 2.7% after it reported mixed fourth-quarter results. While Johnson & Johnson posted revenue of $24.6 billion, comfortably ahead of the $24.15 billion analyst consensus, its adjusted earnings per share of $2.46 came in a penny shy of expectations. The main bright spot in the report was the company's upbeat guidance for fiscal year 2026, forecasting revenue between $100 billion and $101 billion, significantly surpassing the consensus estimate of $98.9 billion.
In the company’s Q4 earnings statement, Chairman and CEO Joaquin Duato framed the past year as a pivotal moment for the company following the spinoff of its consumer health division, Kenvue. “2025 was a catapult year for Johnson & Johnson, fueled by the strongest portfolio and pipeline in our history,” Duato said. “Last year kicked off a new era of accelerated growth, driven by medical innovation that is transforming lives in our six key businesses: Oncology, Immunology, Neuroscience, Cardiovascular, Surgery, and Vision.”
The growth was powered by the company's two core divisions. The Innovative Medicine segment saw strong sales from key drugs, including the cancer treatment Darzalex. The MedTech division also delivered robust growth, bolstered by recent strategic acquisitions such as heart pump maker Abiomed and Shockwave Medical, which are being successfully integrated to expand the company's presence in high-growth cardiovascular markets.
Despite the strong operational performance and management’s confident tone, investors appeared to be peering over the horizon at a significant challenge: the impending patent cliff for Stelara. The immunology drug, a multi-billion dollar revenue generator for J&J used to treat conditions like Crohn's disease and psoriasis, is expected to face competition from biosimilar alternatives in 2025. This looming loss of exclusivity is a primary overhang for the stock, forcing investors to weigh the company's ability to fill the potential revenue gap.
Adding to the headwinds are the long-running legal battles related to allegations that its talc-based baby powder caused cancer. While J&J continues to defend its position, the uncertainty and potential for significant financial liabilities remain a persistent concern for shareholders.
Analysts' ratings reflect this cautious sentiment. While the company holds 13 'Buy' or 'Strong Buy' recommendations, it also has 11 'Hold' ratings, with a consensus price target of $212, slightly below its recent trading levels. This indicates that while Wall Street acknowledges the company's solid foundation, there is widespread apprehension about the medium-term growth trajectory post-Stelara.
Johnson & Johnson's strategy hinges on the success of its deep pipeline and the continued growth of its MedTech unit to offset the anticipated Stelara revenue decline. The market's muted reaction to Tuesday's otherwise strong report signals that for now, investors remain in a 'wait-and-see' mode, looking for definitive proof that the company’s new era of growth can successfully bridge the gap left by its aging blockbusters.