Why Is Johnson & Johnson (JNJ) Up 4.8% Since Last Earnings Report?

Q2 Earnings & Sales Beat Estimates

J&J’s second-quarter 2026 earnings came in at $2.90 per share, which beat the Zacks Consensus Estimate of $2.84. Earnings rose 4.7% from the year-ago period. 

Adjusted earnings exclude intangible amortization expense and special items. Including these items, reported earnings were $2.27 per share, down 0.9% year over year.

Sales of $25.3 billion marginally beat the Zacks Consensus Estimate of $25.1 billion.

Sales rose 6.6% from the year-ago quarter, reflecting an operational increase of 5.6% and a positive currency impact of 1.0%. Organically, excluding the impact of acquisitions/divestitures and currency, sales rose 5.7% on an operational basis. Stelara’s LOE negatively impacted total revenue growth by approximately 460 basis points. Excluding Stelara, sales grew in a double-digit range in the quarter.

Second-quarter sales in the domestic market rose 7.3% to $14.53 billion. Excluding the impact of all acquisitions and divestitures on an adjusted operational basis, domestic sales rose 7.4% in the quarter.

International sales rose 5.7% on a reported basis to $10.8 billion, reflecting an operational increase of 3.4% and a positive currency impact of 2.3%. Excluding the impact of all acquisitions and divestitures on an adjusted operational basis, international sales rose 3.5% in the quarter.

Segment Details

Innovative Medicines Segment

Innovative Medicine sales rose 7.8% year over year to $16.38 billion. Operational sales increased 6.8%, while adjusted operational growth was 6.9%. U.S. sales advanced 8.9%, and international sales increased 6% on a reported basis. Innovative Medicines sales slightly beat the Zacks Consensus Estimate of $16.16 billion.

Higher sales of key products such as Darzalex, Tremfya and Erleada due to strong market growth and share gains drove the segment’s growth. New drugs like Carvykti, Tecvayli, Talvey, Rybrevant and Spravato contributed significantly to growth. These gains were partly offset by lower sales of Stelara, Remicade, Imbruvica and Zytiga.

Stelara’s LOE negatively impacted the Innovative Medicines segment’s growth by 760 basis points in the quarter.

Oncology 

Worldwide oncology sales increased 17.3% to $7.41 billion. 

Darzalex rose 18.9% to $4.21 billion in the quarter, driven by continued share gains across all lines of therapy, particularly the front-line setting, as well as continued market growth. Sales beat the Zacks Consensus Estimate of $4.16 billion. 

Imbruvica sales declined 18.6% to $599 million. Rising competitive pressure in the United States due to new oral competition has been hurting Imbruvica's sales for the past few quarters. Imbruvica sales missed the Zacks Consensus Estimate of $630.0 million.

Erleada sales increased 9.5% to $995 million, driven by share gains and market growth, partially offset by unfavorable patient mix and inventory dynamics. Erleada sales missed the Zacks Consensus Estimate of $1.06 billion.

Among the newer cancer drugs, Carvykti sales surged 49.4% to $657 million, driven by share gains and continued capacity expansion. Another new drug, Tecvayli’s sales jumped 56.5% year over year and 29.2% sequentially to $260 million, driven by launch uptake, share gains from continued expansion into the community setting and the launch of Tecvayli plus Darzalex Faspro for relapsed/refractory multiple myeloma.

Talvey sales advanced 63.3% to $174 million, driven by continued expansion into the community setting. 

Rybrevant/Lazcluze sales climbed 60.8% to $289 million, driven by continued launch uptake in all regions, share gains and the rapid uptake of Rybrevant Faspro.

J&J’s newly launched therapy, Inlexzo, delivered a strong second quarter, with sales more than doubling sequentially from the first quarter number of around $30 million. Sales comfortably exceeded consensus expectations, although J&J did not disclose the exact sales figure. The launch continued to gain momentum in the United States, supported by permanent J-code reimbursement, with one in three eligible patients now starting an Inlexzo regimen, up from one in four in the first quarter.

Immunology

Worldwide immunology sales declined 3.7% to $3.84 billion as biosimilar competition continued to put pressure on Stelara, whose sales fell 55.2% to $740 million. Increasing adoption of novel classes and unfavorable patient mix also hurt Stelara sales in the quarter. However, Stelara sales beat the Zacks Consensus Estimate of $654.0 million.

Tremfya remained the key growth driver, with sales rising 72.5% to $2.05 billion, driven by share gains across all indications, particularly the IBD indications as well as continued market growth. Tremfya sales beat the Zacks Consensus Estimate of $1.85 billion.

Remicade revenues decreased 25.8% to $338 million. Simponi and Simponi Aria sales declined 10.5% to $618 million.

On the conference call, J&J said that it is seeing strong launches for its newly launched oral pill for plaque psoriasis, Icotyde, as well as new drug Imaavy for generalized myasthenia gravis.

Neuroscience, PH and Other Drugs

Neuroscience sales increased 14% to $2.34 billion. Spravato revenues grew 40.8% year over year and 24.8% on a sequential basis to $584 million driven by strong demand trends.

Caplyta, added from last year’s acquisition of Intra-Cellular Therapies, generated $361 million, up 70.9% year over year backed by new patient starts and continuing patient growth following its FDA approval in adjunctive major depressive disorder. Caplyta new patient starts were up 122% year over year.

Invega Sustenna/Xeplion/Invega Trinza/Trevicta sales rose 2.3% to $1.02 billion in the quarter. 

Pulmonary hypertension drug Uptravi recorded second-quarter 2026 sales of $494 million, up 3.8% year over year. Opsumit/Opsynvi sales increased 3.4% to $602 million.

Xarelto sales rose 7.1% to $664 million. Sales of Prezista/Prezcobix/Rezolsta/Symtuza declined 6.3% to $372 million.  

MedTech Segment

MedTech sales increased 4.5% to $8.93 billion, including operational growth of 3.6%. However, MedTech segment sales slightly missed the Zacks Consensus Estimate of $8.96 billion.

Excluding the impact of all acquisitions and divestitures, and currency, on an adjusted operational basis, worldwide sales rose 3.7%. 

In the MedTech segment, sales rose 3.9% in the United States and 3.2% outside of the United States on an operational basis. 

On the conference call J&J clarified that while its Cardiovascular sales slowed down in the second quarter due to weakness in Abiomed, its other three businesses, Surgery, Vision and Orthopedics accelerated in the quarter and performed above expectations. J&J claimed that overall procedure volumes were stable and there was no broad-based slowdown in medical procedure volumes across its MedTech business. J&J clarified that although some large U.S. hospitals have reported weaker volumes for certain elective procedures, those trends are not reflected in its own business. J&J also said that the expiration of Affordable Care Act (ACA) subsidies has not had any meaningful impact on procedure volumes so far and is unlikely to materially affect MedTech demand.

Cardiovascular sales rose 4% to $2.40 billion. However, the growth was slower than prior trends due to competitive pressure in electrophysiology business and decline in Abiomed sales, partially offset by continued double-digit growth in Shockwave. 

Shockwave revenues rose 14.6% to $335 million. Electrophysiology sales increased 4.4% to $1.53 billion as procedure growth, commercial execution and contribution from new products was partially offset by competitive PFA pressures and negative impact from China inventory dynamics. 

Abiomed sales declined 2% to $440 million due to slow procedural volumes driven by usage patterns. Abiomed procedure volumes were hurt by uncertainty among physicians after a U.K. study questioned the benefit of using Impella devices in certain high-risk procedures. J&J believes this led to slower Impella usage as doctors reassessed patient selection for the device. J&J believes this is a temporary issue and is working with physicians to ensure the device is used in the right patients based on its existing clinical evidence. However, Abiomed sales in outside U.S. markets remained strong.

Worldwide Surgery grew 3.9% to $2.65 billion as growth in wound closure and biosurgery offset the impact of competitive pressure in energy and endocutters and VBP issues in China. Worldwide orthopedics rose 4.9% to $2.42 billion, driven by new product launches and strong commercial execution. Worldwide Vision rose 6.0% to $1.45 billion, driven primarily by higher growth in contact lenses and Surgical Vision partially offset by competitive pressures in the United States in Surgical Vision.

Slightly Ups 2026 Guidance

Backed by a strong second-quarter performance and uptake of new products, J&J raised its 2026 reported sales guidance to $100.8-$101.4 billion from $100.3-$101.3 billion. The sales projection indicates growth in the range of 7.0%-7.6% versus the prior expectation of 6.5%-7.5%. Operational sales growth is expected in the range of 6.5%-7.1% versus the prior expectation of 5.9%-6.9%.

Adjusted operational sales (excluding currency impact, acquisitions/divestitures) growth is expected in the range of 6.2%-6.8% versus the prior expectation of 5.6%-6.6%.

In 2026, the 53rd week is expected to provide a benefit of approximately 100 basis points. Operational sales growth is expected to improve in the second half of the year with fourth-quarter growth expected to be higher due to the benefit from the 53rd week.

Adjusted earnings per share guidance was raised from a range of $11.45-$11.65 to $11.60-$11.75. Adjusted earnings per share growth is expected in the range of 7.5%-8.9% versus the prior expectation of 6.1%-8.1%.

Adjusted pretax operating margin is expected to improve by approximately 75 basis points, higher than the prior expectation of 50 basis points.

The company projects net interest expense to be between $250 million and $300 million, slightly lower than the prior expectation of $300 million to $400 million. The adjusted tax rate is expected to be approximately 17.0% to 18.0% (previous expectations: 17.5% to 18.5%).

J&J expects its Innovative Medicine segment to remain a key growth driver in the second half of 2026. 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 which can offset the ongoing impact of Stelara biosimilar competition. J&J expects continued above-market growth through the remainder of 2026.

Other than Stelara LOE impact, J&J expects generic impact for both Simponi and Opsumit to begin in 2026.

J&J expects its MedTech business to perform better in the second half of the year than it did in the first half. However, it has lowered expectations for Abiomed, anticipating only modest growth through the remainder of 2026 instead of a sharper rebound. However, it emphasized that the business is not expected to decline, with growth likely to gradually improve as the year progresses. J&J expects a more meaningful acceleration in Abiomed's growth to occur after the release of the PROTECT IV study data in 2027.

Overall, J&J expects MedTech growth to improve in the second half, driven by strength in Vision, Orthopedics, Surgery and better performance in Cardiovascular.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a flat trend in estimates review.

VGM Scores

At this time, Johnson & Johnson has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for value investors.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Johnson & Johnson has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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