Johnson & Johnson (JNJ Quick QuoteJNJ - Free Report) reclaimed its 50-day simple moving average (SMA) on Oct. 22, 2026, after trading below this key technical indicator since late September. The stock closed at $267.61, above its 50-day SMA, marking a potentially encouraging shift in near-term momentum. J&J’s stock was mainly hurt by mixed third-quarter 2026 results, announced on Oct. 13. Adjusted earnings beat estimates but sales missed the same. Earnings of $2.59 per share declined 7.5% from the year-ago quarter, while sales rose 5.9% year over year to $25.4 billion.

Innovative Medicine sales exceeded estimates, supported by continued strength in Tremfya and contributions from newer therapies. However, key cancer drugs, Darzalex, Erleada and Imbruvica fell short of expectations. MedTech revenues also missed estimates. MedTech segment sales increased just 2.5% to $8.64 billion, compared with 7.7% growth in Innovative Medicine to $16.76 billion.

Although the company increased its full-year outlook, weaker-than-expected performance in its MedTech business weighed on investor sentiment and hurt the stock price.

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.

Innovative Medicine Drives J&J’s Growth Despite Stelara LOE

J&J’s Innovative Medicines segment is the company’s primary growth engine. Innovative Medicine segment sales rose 6.9% on an organic basis in the first nine months of 2026, despite the loss of exclusivity (LOE) of the blockbuster drug, Stelara. Growth was driven by J&J’s key drugs like Darzalex, Erleada and Tremfya. New drugs like Carvykti, Tecvayli, Talvey, Rybrevant/Lazcluze and Spravato also contributed significantly to growth.

J&J expects its Innovative Medicine segment to remain a key growth driver in future quarters. The growth is expected to be driven by its key products, such as Darzalex, Tremfya, Spravato, Carvykti, Tecvayli and Erleada, as well as increased contribution from new launches like Icotyde, Rybrevant/Lazcluze, Imaavy and Inlexzo, which can offset the ongoing impact of Stelara biosimilar competition. J&J expects continued above-market growth for the Innovative Medicine segment.

The company also expects oncology sales to exceed $50 billion by 2030.

New Products Strengthen J&J’s Long-Term Growth Prospects

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 the past year, it has 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; Imaavy (nipocalimab) for treating generalized myasthenia gravis and warm autoimmune hemolytic anemia and Icotyde (icotrokinra), an oral targeted peptide inhibitor of the IL-23 receptor, for treating moderate-to-severe plaque psoriasis (PsO). J&J markets Icotyde in partnership with Protagonist Therapeutics (PTGX Quick QuotePTGX - Free Report) .

J&J believes that nipocalimab has a pipeline-in-a-product potential and 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 sales potential.

J&J is seeing strong launches of all these new drugs, Inlexzo, Icotyde as well as Imaavy.

The company'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 $4.1 billion in sales in the first nine months of 2026.

J&J believes 10 of its new products 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 Sales Falls Short in Q3

J&J’s MedTech performance fell below internal expectations in the third quarter, particularly in international markets and at Abiomed.

Abiomed sales declined 2.3% in the third quarter due to lower procedure volumes and more cautious physician use of Impella following a U.K. clinical trial that questioned its benefit in certain high-risk procedures. Changes in patient selection weighed on demand, creating uncertainty around the business’s recovery.

Internationally, expanded volume-based procurement in China, the impact of J&J’s surgery transformation program, and Middle East disruptions to tender timing and ordering patterns hurt sales in the Surgery segment. Competitive pressure in pulsed field ablation, particularly in Asia-Pacific, hurt electrophysiology growth.

Although MedTech’s operational sales growth slowed in the second and third quarters of 2026, MedTech performance is projected to improve in the fourth quarter, supported by a stable procedure environment and new product launches. Growth is expected to strengthen further in 2027. J&J also expects Surgery to return to growth in the fourth quarter, driven by continued U.S. growth and an acceleration in EMEA

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.

Stelara’s LOE negatively impacted the Innovative Medicines segment’s growth by 7.9% in the first nine months of 2026. In addition, J&J began facing generic competition for Simponi and Opsumit in mid-2026 as the drugs lost patent protection. Simponi biosimilars entered the European market in the second quarter, hurting third-quarter sales, while U.S. biosimilar launches are expected later this year. Opsumit also faced generic competition in the United States from late in the second quarter, weighing on third-quarter sales.

J&J faces roughly 76,000 remaining ovarian talc claims, which allege that its talc products contain asbestos that caused many women to develop ovarian cancer. J&J denies these allegations. Despite efforts to settle these matters, litigation has remained a longstanding overhang, generating substantial costs and negative headlines.

Though the issue is close to resolution, it has not yet been fully resolved. A proposed settlement could resolve nearly all remaining ovarian talc claims, but remains conditional. Announced in July 2026, the agreement includes an estimated $5.5 billion commitment and requires participation by plaintiff firms representing at least 95% of remaining claims, among other conditions. It covers existing claims only. The proposed payment schedule calls for up to $3 billion in 2027, with no additional payments due before 2028.

J&J Stock Price, Valuation and Estimates

J&J’s shares have outperformed the industry so far this year. The stock has risen 29.3% this year compared with 17.0% appreciation of 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

J&J is steeply valued. Going by the price/earnings ratio, the company’s shares currently trade at 22.73 forward earnings, higher than 19.02 for the industry. The stock is also trading above its five-year mean of 15.66. J&J stock is cheaper than only one large drugmaker, Eli Lilly (LLY Quick QuoteLLY - Free Report) .

JNJ Stock Valuation

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for 2026 earnings per share has declined from $11.61 to $11.12 over the past 30 days, while that for 2027 has declined from $12.83 per share to $11.69 per share over the same time frame.

JNJ Estimate Movement

Image Source: Zacks Investment Research

Short-Term Investors May Exit the Stock

J&J’s biggest strength is its diversified business model, as it operates through pharmaceuticals and medical devices divisions, which reduces dependence on any single product or market. It has more than 275 subsidiaries and boasts 29 platforms or products with more than $1 billion in annual sales, with the aim of adding even more. Its diversification helps it withstand economic cycles more effectively. It also boasts strong cash flows and has increased its dividends for 64 consecutive years.

J&J continues to expect accelerated growth in 2026. Strength in Innovative Medicine is expected to persist, while MedTech performance is projected to improve in the fourth quarter. J&J is confident about achieving its target of generating more than $100 billion in revenues in 2026, with $74.8 billion already generated in the first three quarters. It expects sales growth to be even better in 2027, with a “line of sight” to double-digit growth by the end of the decade.

However, J&J’s MedTech business underperformed in both the second and third quarters of 2026, raising concerns about the pace of its growth recovery. While management expects performance to improve, these headwinds create uncertainty around the timing and strength of the rebound. Sustained acceleration will depend on an Abiomed recovery and better international execution.

J&J also faces pressure from Stelara’s LOE and rising generic/biosimilar competition across several drugs. Though the litigation issue is close to resolution, it has not yet been fully resolved.

Long-term investors may stay invested in J&J stock. However, short-term investors may consider exiting this Zacks Rank #4 (Sell) stock, as it is expensive at current levels, and estimates are declining.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A single-day crossover does not necessarily confirm a sustained recovery. Continued trading above the 50-day SMA is important for establishing stronger bullish momentum.