Johnson & Johnson (JNJ) shares are navigating a period of volatility as investors weigh the company’s pharmaceutical growth against broader market rotations and macroeconomic pressures. According to FactSet, the healthcare giant faces a critical test during its second-quarter earnings report, with analysts closely monitoring the performance of key oncology and immunology drugs to justify the stock’s recent climb back toward record highs.
Market Rotation and Healthcare Sector Performance
J&J’s stock performance has been closely tied to a wider investor retreat from artificial intelligence-focused hardware and chip stocks. Since the beginning of June, the healthcare sector has outperformed chip stocks, with J&J climbing over 14% through Monday’s close. Leerink biopharma analyst David Risinger notes that while the “market rotation out of tech and into healthcare” has been a primary driver of this recovery, the company’s underlying fundamentals remain a critical component of the rally.
The stock experienced a significant pullback after reaching highs in early March, dropping nearly 11% before bottoming out in May. It regained momentum in late June, though recent global geopolitical tensions and a cautious preliminary earnings report from hospital operator HCA Healthcare have pressured the broader sector, including J&J.
Did you know?
J&J’s Innovative Medicine segment accounts for approximately two-thirds of its total revenue, significantly outpacing the MedTech division in growth rates.
The Role of Oncology and Immunology Franchises
Growth expectations hinge on the performance of J&J’s flagship therapies. Darzalex, a blood-cancer treatment, remains the company’s top-selling drug. FactSet consensus estimates for the second quarter sit at $4.24 billion, representing a 19.8% year-over-year increase. CEO Joaquin Duato has stated that J&J maintains a “bold ambition to become the No. 1 company in oncology by 2030.”
Complementing Darzalex is Carvykti, a personalized cancer therapy that saw 57% growth in the previous quarter. Analysts anticipate continued expansion, projecting 49% growth to $654 million for the second quarter. Beyond oncology, the immunology drug Tremfya is a key focus for investors, with expectations of 50% year-over-year growth reaching $1.78 billion. The recent launch of Icotyde, the first daily pill in the IL-23 inhibitor class, is also being tracked as a potential long-term “cash cow,” though revenue contributions are expected to remain minimal in the immediate term due to its mid-March launch.
MedTech and Segment Separation
Following the 2023 separation of the consumer-health division into Kenvue, J&J has focused on its two remaining pillars: Innovative Medicine and MedTech. RBC Capital analyst Shagun Singh highlights cardiovascular care as the most vital end market within MedTech, noting that these categories are largely “non-elective.” The company announced in October 2025 that it would separate its orthopaedics business, considering options that include a potential sale or spinoff to further streamline operations.
Investor Outlook and Analyst Price Targets
Wall Street sentiment remains generally positive, with nearly 70% of analysts holding a buy-equivalent rating. According to FactSet, the average price target of $254 aligns closely with recent trading levels. While some, such as RBC Capital’s Shagun Singh, maintain a $265 price target, others like Goldman Sachs analysts have set targets as high as $275, citing expert surveys that support the long-term revenue potential of new product launches like Icotyde.
Pro Tip:
When evaluating healthcare stocks like J&J, monitor the “Innovative Medicine growth rate minus Stelara.” As Stelara loses exclusivity, analysts are looking for offsetting growth from newer, high-performing drugs to maintain overall margins.
Frequently Asked Questions
Why is Stelara’s performance declining?
J&J lost exclusivity for Stelara in 2025, leading to significant competition from lower-cost biosimilar alternatives. Sales for the drug fell 62% in the first quarter.
What is the status of the Kenvue separation?
The consumer-health division, now known as Kenvue, became a standalone company in 2023. It is currently in the process of being acquired by Kimberly-Clark.
How does MedTech compare to the Innovative Medicine segment?
Innovative Medicine is both larger and faster-growing, expanding at a 7.4% rate in the first quarter compared to 4.6% for the MedTech division.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.
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