What To Expect From Johnson & Johnson Stock?

Johnson & Johnson just experienced its biggest transformation in decades. Consumer health was spun off as Kenvue in 2023. Now the orthopedics business is getting separated as DePuy Synthes by 2027. What remains? A focused healthcare powerhouse in Innovative Medicine and high-growth MedTech.

The stock is trading around $207, up 38-40% year-to-date through December 2025, hitting an all-time high of $215 in mid-December. Market cap sits at $500 billion. The question for 2026 isn’t whether J&J grows—it’s whether management can execute the transition from Stelara’s $11 billion peak to a portfolio of next-generation drugs while navigating legal headwinds and MedTech challenges.

What’s Wall Street forecasting for next year?

• 2026 Full-Year Revenue: $97-99 billion (approximately 5% growth from $93.7 billion estimated in 2025)
• 2026 EPS: $11.54 (5-6% growth from an estimated $10.87 in 2025)
• Management Guidance: Revenue growth exceeding 5%, EPS around $11.44.
• Current Trading Multiples: 18x forward P/E (above the 15x industry average)

But here’s the disconnect: management thinks Wall Street’s estimates are too low. On their Q3 2025 earnings call, CEO Joaquin Duato explicitly stated that consensus numbers underestimate 2026 performance. J&J expects both Innovative Medicine and MedTech to accelerate growth in 2026, driven by new product launches and market share gains.

The confidence comes from pipeline momentum. Despite losing Stelara’s exclusivity—which contributed 18% of Innovative Medicine revenue in 2024—J&J delivered operational sales growth of 5-6% in 2025.

In this analysis, we dive into the factors that could propel the stock growth in 2026. But before we dive in, if you seek an upside with less volatility than holding an individual stock like JNJ, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell 2000, and S&P MidCap indexes—and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

Image by Renate Köppel from Pixabay

Growth Drivers: What Could Propel 2026?

Can J&J actually grow in 2026 despite the “Stelara cliff”? The data says yes. Here is the breakdown of what is driving that momentum:

1. Innovative Medicine: Filling the Stelara Gap

Stelara is losing billions to biosimilars, but J&J’s pharma wing is expected to grow anyway thanks to a powerhouse lineup:

• Oncology Titans: Darzalex is now a $3B-per-quarter drug, and Carvykti (CAR-T) saw 87% growth recently. New lung cancer therapies like Rybrevant could become $5B assets.
• Immunology & Neuroscience: Tremfya is scaling rapidly to replace Stelara’s footprint. Meanwhile, the $14B acquisition of Caplyta and the launch of Spravato for depression are opening massive new markets.

The Math: J&J expects $5B in new growth from these drugs to more than offset the $2-3B loss from Stelara in 2026.

2. MedTech: Shifting to High Gear

J&J is aggressively pruning its MedTech portfolio to focus on high-growth, high-margin sectors:

• Cardiovascular: Acquisitions of Shockwave and Abiomed have made J&J a leader in heart recovery and calcified artery treatment—markets growing at 20%+ annually.
• Robotics: The OTTAVA robotic system is slated for FDA submission in 2026, finally giving J&J a direct competitor to Intuitive Surgical.
• Vision: Steady growth continues through Acuvue and new intraocular lenses launching in 2026.

3. The Orthopedics Spinoff (DePuy Synthes)

J&J is spinning off its $9B orthopedics business by late 2026.

• The Logic: Orthopedics is a mature, slower-growth market.
• The Result: By “shrinking to grow,” J&J transforms into a leaner, faster-moving company. Post-spinoff, revenue growth is projected to jump from 4-5% to 6%+.

4. Regulatory & Financial Health

• Pipeline: 2026 is a big year for FDA nods, including new uses for Caplyta and the OTTAVA robot.
• Dividends: With 62 years of increases, J&J’s “Dividend Aristocrat” status is safe. Expect another 3-5% hike in 2026, supported by a fortress balance sheet.

Analyst Sentiment: Where Does Wall Street Stand?

The Consensus:

• Around 27 analysts covering JNJ
• Buy rating: 11 analysts
• Overweight rating: 4 analysts
• Hold rating: 11 analysts
• Underweight rating: 1 analyst
• Sell rating: 0 analysts
• Average price target: range from $180 to $240
• Median target: $214

Risks: What Could Go Wrong In 2026?

While J&J has a lot of momentum, there are a few “elephants in the room” that could trip things up in 2026. Here’s the concise reality check on those risks:

1. The Talc Litigation Overhang: The lawsuit saga isn’t over. With over 73,000 claims alleging talc caused cancer, J&J is stuck in a legal loop. There’s a risk that courts keep rejecting J&J’s attempts to settle via bankruptcy. A recent $1.56 billion verdict in Baltimore shows how expensive single cases can be. If 2026 brings a string of similar losses, the liability could reach tens of billions, keeping the stock price suppressed regardless of how many drugs they sell.
2. The “Stelara Cliff” Could Be Steeper: Everyone knows Stelara’s revenue is dropping, but the speed is the question. In a bear case, J&J expects a $2–3B hit, but if biosimilars and Medicare price cuts hit harder than expected, that hole could widen to $5–6B. New drugs like Tremfya are growing, but replacing an $11B-a-year blockbuster is a massive mountain to climb in just one year.
3. Headwinds in China: China is J&J’s second-largest market, but it’s becoming a difficult place to do business. Government pricing pressures (Volume-Based Procurement) and a push for domestic Chinese medical brands are squeezing J&J’s margins. If the Chinese economy stays sluggish or trade tensions rise in 2026, MedTech growth might stall.
4. Execution & Competition Risk: J&J is betting the house on specific launches: The “What Ifs”: What if the OTTAVA robot can’t compete with the established da Vinci system? Or if Tremfya loses the “IBD wars” to AbbVie’s Skyrizi? In oncology and immunology, J&J is fighting giants like Merck and Lilly. Any clinical delay or slow market uptake in 2026 would be a major setback.
5. Is the Stock “Priced to Perfection”?: After a massive 45% rally in 2025, J&J is trading at an all-time high ($215 range). The Valuation Gap: At 18x forward earnings, it’s pricier than its historical average. Many analysts think the 2026 “good news” is already baked into the price. If the company hits even one minor speed bump, the stock could easily slide back to the $170–$185 range.

Valuation: Is JNJ Fairly Priced for 2026?

Current state: $207 per share, 18x forward P/E, $500 billion market cap, 2.48% dividend yield.

Bull Case Scenario:

• 2026 EPS: $11.70-$12.00 (management beats consensus by $0.30-$0.60)
• Stock re-rates to 19-20x P/E (pipeline momentum + legal clarity)
• Target price: $220-$240 (6%-16% upside)
• Potential for multiple expansion if talc litigation resolves favorably

Base Case Scenario:

• 2026 EPS: $11.40-$11.50 (roughly consensus)
• P/E stays around 17x
• Target price: $195 (flat to slight downside)
• Plus 2.5% dividend yield = 2-3% total return
• Sideways trading as market awaits execution confirmation

Bear Case Scenario:

• 2026 EPS: $11.00-$11.20 (misses due to Stelara or legal costs)
• P/E contracts to 15-16x on disappointment
• Target price: $165-$180 (15-20% downside)
• Dividend yield provides some cushion
• Legal verdicts or pipeline disappointments trigger de-rating

Comparison to Peers:

Merck: 14x forward P/E
Pfizer: 10x forward P/E (depressed due to COVID headwinds)
AbbVie: 14x forward P/E
Bristol Myers Squibb: 9x forward P/E
Eli Lilly: 40x forward P/E (growth premium)

JNJ at 18x forward P/E sits in the middle—more expensive than Merck and AbbVie, but cheaper than high-growth Lilly. Fair valuation for a defensive, dividend-paying healthcare giant transitioning portfolios.

The Bottom Line

If you’re investing in JNJ for 2026, you’re betting that:

• The Stelara cliff is manageable, not catastrophic
• New drug launches (Caplyta, Rybrevant, Tremfya expansion) offset patent losses
• MedTech portfolio shift to cardiovascular and robotics drives growth acceleration
• Talc litigation remains contained (no more multi-billion dollar verdicts)
• Orthopedics spinoff creates value through strategic focus

The risk-reward looks balanced at current levels. At 18x forward earnings with 2.5% dividend yield, JNJ offers 4-7% downside protection from the dividend and defensive healthcare positioning, with 10-15% upside if execution delivers.

For 2026, this isn’t a high-growth story—it’s a “portfolio transition” story. J&J’s moving from Stelara dependence to a diversified mix of next-generation oncology, immunology, and neuroscience drugs, while shifting MedTech from low-growth orthopedics to high-growth cardiovascular and robotics.

The setup favors patient, income-focused investors who can tolerate legal headline risk and slow growth. Not a 20-30% compounder, but a steady 7-10% total return vehicle with downside protection. That said, investing in a single stock without comprehensive analysis can be risky. Consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

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