Johnson & Johnson’s (JNJ Quick QuoteJNJ - Free Report) first-quarter results were better than expected as it beat estimates for both earnings and sales. Despite the blockbuster drug, Stelara's loss of exclusivity (LOE), the Innovative Medicines unit once again outperformed expectations as sales of most key drugs like Darzalex, Tremfya and Erleada beat estimates. The company also marginally raised its sales and earnings guidance for the year.

However, a single quarter’s results are not so important for long-term investors, and the focus should rather be on the company’s strong fundamentals. Let’s understand the company’s strengths and weaknesses to better analyze how to play J&J stock in the post-earnings scenario.

JNJ’s Innovative Medicine Showing Consistent Growth

J&J’s Innovative Medicine unit is showing a growth trend. The segment’s sales rose 5.6% on an organic basis in the first quarter of 2026 despite Stelara’s LOE. Growth was driven by J&J’s key drugs like Darzalex, Erleada and Tremfya. New drugs like Carvykti, Tecvayli, Talvey, Rybrevant and Spravato also contributed significantly to growth.

The segment recorded four consecutive quarters of sales of more than $15 billion despite the LOE of Stelara.

In 2026, J&J expects accelerated growth in the Innovative Medicine segment despite Stelara LOE. The growth is expected to be driven by its key products, such as Darzalex, Tremfya, Spravato, Carvykti and Erleada, as well as increased contribution from new launches like Icotyde, Rybrevant and Inlexzo.

J&J’s Recent Significant Pipeline Progress

In 2025, J&J invested more than $32 billion in R&D and M&A, including the acquisitions of Intra-Cellular Therapies and Halda Therapeutics.

J&J also rapidly advanced its pipeline in the past year, attaining significant clinical and regulatory milestones that will help drive growth through the back half of the decade. In 2025, it gained approval for new products like Inlexzoh/TAR-200, a first-of-its-kind drug-releasing system, for treating high-risk non-muscle invasive bladder cancer and Imaavy (nipocalimab) for treating generalized myasthenia gravis.

J&J believes that nipocalimab has a pipeline-in-a-product potential. The positive trend of new drug approvals continued in 2026 with the FDA approving J&J and partner Protagonist Therapeutics’ (PTGX Quick QuotePTGX - Free Report) Icotyde (icotrokinra), an oral targeted peptide inhibitor of the IL-23 receptor, for treating moderate-to-severe plaque psoriasis (PsO) in the United States in March. J&J believes that Icotyde/icotrokinra has the potential to revolutionize the treatment of plaque psoriasis with a once-a-day pill. It has the potential to be J&J’s largest product ever, with $10 billion in sales potential.

J&J’s new cancer drugs, Carvykti, Tecvayli, Talvey and Rybrevant/Lazcluze are contributing significantly to top-line growth driven by market share gains. Combined, they generated $1.2 billion in sales in the first quarter of 2026. J&J’s acquisition of Intra-Cellular Therapies added antidepressant drug, Caplyta, to its neuroscience portfolio, which is approved for the treatment of schizophrenia, depression in both bipolar 1 and 2, and major depressive disorder. Caplyta generated $270 million in sales in the first quarter.

J&J expects a more pronounced impact from new products in 2026 than in 2025. J&J expects that contributions from its new product launches across oncology, immunology and neuroscience will increase as the year progresses.

J&J believes 10 of its new products/pipeline candidates in the Innovative Medicine segment have the potential to deliver peak sales of $5 billion, including Talvey, Tecvayli, Imaavy, Caplyta, Inlexzo, Rybrevant plus Lazcluze and Icotyde.

J&J’s MedTech Segment Sales Improving

J&J’s MedTech business has improved in the past four quarters, driven by the acquired cardiovascular businesses, Abiomed and Shockwave, as well as Surgical Vision and wound closure in Surgery. Improvements in J&J’s electrophysiology business also drove growth. MedTech sales rose 4.7% on an organic basis in the first quarter.

Moreover, the potential separation of its Orthopaedics franchise into a standalone orthopedics-focused company, called DePuy Synthes, should improve its MedTech unit’s growth and margins. The Orthopaedics franchise has been a slow-growth business for J&J.

In 2026, J&J expects better growth in the MedTech business than 2025 levels, driven by increased adoption of newly launched products across Cardiovascular, Surgery and Vision portfolios.

However, the company continues to face headwinds in China. Sales in China are being hurt by the impact of the volume-based procurement (VBP) program, which is a government-driven cost containment effort in China. J&J expects continued impacts from VBP issues in China in 2026, mainly in the second half.

Patent Expiration of J&J’s Drug Stelara & Other Headwinds

J&J lost U.S. patent exclusivity of Stelara in 2025. Stelara was a key top-line driver for J&J, accounting for around 18% of J&J’s Innovative Medicine unit’s sales in 2024, before it lost patent exclusivity in 2025.

Several biosimilar versions of Stelara were launched in the United States in 2025 as the drug lost patent exclusivity.

According to patent settlements and license agreements, Amgen (AMGN Quick QuoteAMGN - Free Report) , Teva Pharmaceutical Industries (TEVA Quick QuoteTEVA - Free Report) , Samsung Bioepis/Sandoz and some other companies launched Stelara biosimilars in 2025. Stelara’s LOE negatively impacted the Innovative Medicines segment’s growth by 920 basis points and total revenues by 540 basis points in the first quarter. Stelara’s sales declined 62% in the first quarter, which was steeper than expected. J&J expects generic impact for both Simponi and Opsumit to begin in 2026 as the drugs lose patent protection.

In addition, sales are being hurt by the impact of the Medicare Part D redesign under the Inflation Reduction Act (IRA). The Part D redesign is mainly affecting sales of drugs like Stelara, Erleada and pulmonary hypertension drugs.

J&J faces more than 74,000 lawsuits for its talc-based products, primarily baby powders. The lawsuits allege that its talc products contain asbestos, which caused many women to develop ovarian cancer. J&J insists that its talc-based products are safe and do not cause cancer. The company permanently discontinued the sales of the talc-based Johnson’s Baby Powder.

In April 2025, a bankruptcy court in Texas rejected J&J’s proposed bankruptcy plan to settle its talc lawsuits after a two-week trial in Houston. J&J has gone back to the traditional tort system to fight the lawsuits individually, with its bankruptcy strategy to settle the lawsuits failing for the third time.

J&J Stock Price, Valuation and Estimates

J&J’s shares have outperformed the industry over the past year. The stock has risen 49.3% in the past year compared with 20.4% appreciationof the industry. 

The stock has also outperformed the sector and the S&P 500 Index, as seen in the chart below.

JNJ Stock Outperforms Industry, Sector & S&P 500

Image Source: Zacks Investment Research

From a valuation standpoint, J&J is slightly expensive. Going by the price/earnings ratio, the company’s shares currently trade at 19.73 forward earnings, higher than 17.03 for the industry. The stock is also trading above its five-year mean of 15.65.

JNJ Stock Valuation

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for 2026 earnings has risen from $11.55 to $11.57 over the past seven days, while that for 2027 earnings has gone up from $12.48 per share to $12.57 over the same time frame.

JNJ Estimate Movement

Image Source: Zacks Investment Research

Stay Invested in J&J’s Stock

J&J’s biggest strength is its diversified business model, as it operates through pharmaceuticals and medical devices divisions. It has more than 275 subsidiaries and boasts 28 platforms or products with more than $1 billion in annual sales, with the aim of adding even more. Its diversification helps it to withstand economic cycles more effectively. It also boasts strong cash flows and has increased its dividends for 64 consecutive years. J&J believes that the depth of its portfolio and pipeline is stronger than ever.

The company expects 2026 to be a year of accelerated growth, and the beat-and-raise performance in the first quarter shows it is delivering on that promise. The company expects both its Innovative Medicines and MedTech segments to deliver stronger growth this year. The company is confident that it can achieve its target of generating around $100 billion in revenues in 2026. It expects sales to continue to improve in 2027, with a “line of sight” to double-digit growth by the end of the decade.  J&J believes that it is already achieving this growth. Though J&J’s total revenues are currently rising in a mid-single-digit range, excluding Stelara, J&J’s top line grew in a double-digit range in the first quarter.

Despite headwinds like the legal battle surrounding its talc lawsuits, the Stelara patent cliff, the upcoming LOE of key drugs Opsumit and Simponi and softness in MedTech China, J&J looks quite confident that it will be able to navigate these challenges.

J&J’s price appreciation, rising estimates, consistent earnings and sales growth, important new launches and pipeline depth suggest that one should stay invested in this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.