J&J Shares Fall Despite Drug Gains as MedTech Growth Lags

Johnson & Johnson topped third-quarter forecasts and lifted its sales outlook, yet the stock fell more than 5% on Tuesday. The weakness behind the slide was in the medical-device business, which grew just 2.5% while pharmaceutical sales advanced 7.7%.

Adjusted earnings per share came in at $2.59, above the $2.53 estimate but down 7.5% from a year earlier. Among the largest holdings in the iShares US Pharmaceuticals ETF, only Merck has performed better than J&J this year.

Why Did a Device Shortfall Matter More Than 7.7% Drug Growth?

The pharmaceutical division generated $16.76 billion, roughly 66% of the quarter's sales. Tremfya, used to treat psoriasis and bowel disease, surged 68.3% to nearly $2.4 billion.

Darzalex, a blood-cancer treatment, contributed $4.24 billion, just under the $4.4 billion analysts had forecast.

Medical device revenue, however, rose 2.5% to $8.64 billion, missing the $8.71 billion expected by analysts, according to LSEG. U.S. device sales were up 4.8% on the company's earnings call, while Reuters reported that sales elsewhere were essentially flat.

Chief Financial Officer Joe Wolk pointed to Gulf governments shifting budgets toward defense, austerity in Europe and pricing pressure in China. Separately, J&J's Abiomed heart-pump unit is facing questions from a U.K. study about the device's benefits in certain high-risk procedures.

Wolk said demand in those countries has not gone away.

“So we think that’ll remedy itself as we move into 2027.”

Joe Wolk, Johnson & Johnson's executive vice president and chief financial officer, said this in an interview.

Does the J&J Slide Reflect Company Trouble or MedTech Weakness?

By early September, shares of Boston Scientific, another device maker, were down roughly 49.5% for 2026. Guidance cuts and an August cyberattack had weighed on the shares.

On CNBC, analysts noted that J&J is changing hands at about 20 times earnings, compared with 15 to 16 earlier. Those analysts argued the recent advance had already accounted for the good news.

DePuy Synthes, the orthopedics arm, is slated to be spun off by mid-2027, a move that follows the Kenvue consumer-health spinoff. Wolk argued that low medtech valuations are attractive to buyers, making a spinoff preferable to a sale. The plan, along with 2027 guidance, is due to be presented at a Dec. 8 investor event.