Johnson & Johnson (J&J) beat third-quarter estimates and raised its sales forecast, yet shares fell more than 5% on Tuesday. The J&J selloff centers on its medical device unit, which grew only 2.5% while drug sales rose 7.7%.
Adjusted earnings of $2.59 per share topped the $2.53 estimate, though they fell 7.5% from a year earlier. Only Merck has outperformed J&J among the largest holdings of the iShares US Pharmaceuticals ETF this year.
Why Did a MedTech Miss Outweigh 7.7% Drug Growth?
J&J’s drug unit generated $16.76 billion, about 66% of quarterly sales. Tremfya, a psoriasis and bowel disease treatment, jumped 68.3% to nearly $2.4 billion.
Still, Darzalex, a blood cancer drug, reached $4.24 billion, short of the $4.4 billion analysts expected.
However, MedTech sales rose 2.5% to $8.64 billion, below the $8.71 billion analysts expected, according to LSEG. Device sales in the U.S. rose 4.8%, according to the earnings call, while Reuters reported sales elsewhere were essentially flat.
Chief Financial Officer Joe Wolk blamed Gulf governments shifting budgets to defense, European austerity, and pricing pressure in China. Separately, Abiomed, its heart pump unit, faces a U.K. study questioning the device’s benefits in some high-risk procedures.
Wolk said demand in those countries has not disappeared.
“So we think that’ll remedy itself as we move into 2027.”
Joe Wolk, executive vice president and chief financial officer of Johnson & Johnson, in an interview.
Is the J&J Selloff a Company Problem or a Medtech Problem?
In contrast, Boston Scientific, another device maker, had lost about 49.5% in 2026 by early September. Guidance cuts and an August cyberattack weighed on those shares.
Meanwhile, on CNBC analysts said J&J trades near 20 times earnings, up from 15 to 16 earlier. Theyargued the rally had already priced in good news.
J&J plans to spin off DePuy Synthes, its orthopedics unit, by mid-2027, following the Kenvue consumer health spinoff. Wolk said depressed medtech valuations favor buyers, so J&J prefers a spin-off to a sale. Management will detail that plan and 2027 guidance at an investor event on Dec. 8.
