Johnson & Johnson Drops 5% as One-Time Charges Overshadow Raised Full-Year Outlook; Eli Lilly Dips, Pfizer Sits Out the Selloff
A raised full-year outlook failed to cushion Johnson and Johnson shares from a sharp selloff, as a single line item in its earnings release sent reported profit into a near-total collapse and left investors weighing whether the company's bold growth…
Johnson & Johnson (NYSE:JNJ | JNJ Price Prediction) stock is at $249.55, down 5% early in the session. The company raised its full-year outlook in the same release that showed its reported profit falling under one-time charges.
Meanwhile, Eli Lilly (NYSE:LLY) stock is at $1,174.46, down 0.7%, representing a much milder decline than Johnson & Johnson stock. At the same time, Pfizer (NYSE:PFE) stock is at $28.34, down 0.2%, holding even closer to flat than Eli Lilly stock.
Sector-wide, the Health Care Select Sector SPDR ETF (NYSEARCA:XLV) is declining 1%, and both Johnson & Johnson and Eli Lilly rank among its largest holdings. For a broad-market reading, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is down by only 0.2%.
Talc Charge Swamps a Raised Forecast
Johnson & Johnson said Q3 2026 revenue grew 5.9%, and the company raised its full-year sales and adjusted earnings forecasts. Johnson & Johnson said reported net earnings fell 95.9%, a decline it attributed to special items. Those items included a charge tied to its proposed talc litigation resolution, the acquisition of Firefly Bio and a collaboration with Sail Biomedicines.
Chairman and chief executive Joaquin Duato stated that the quarter reflected accelerating momentum and that investments in high-growth areas give the company a clearer path to double-digit growth by the end of the decade. Yet, the selloff shows the collapse in reported profit outweighing the higher targets for now.
Medicines Carry the Quarter While MedTech Lags
Johnson & Johnson’s growth came from the Innovative Medicine division, led by cancer treatments including Darzalex, Carvykti and Tecvayli. MedTech, by contrast, grew far more slowly.
“Our performance is below the standard we have set internally and below the expectations we previously communicated to investors. Simply put, we can do better and we absolutely will,” Tim Schmid declared. Management pointed to weakness outside the U.S. and at Abiomed globally as the main pressure points. Procedure demand, by management’s account, remained stable across key markets.
Structurally, Johnson & Johnson runs an Innovative Medicine division selling branded prescription drugs and a MedTech division selling surgical devices, orthopedic implants and contact lenses. Eli Lilly and Pfizer carry no comparable device exposure, which is why a soft quarter in medical devices doesn’t read across to either company.
Separately, Johnson & Johnson won market authorization for its OTTAVA robotic surgical system during the quarter and secured priority review for RYBREVANT FASPRO in advanced head and neck cancer. Plans to separate the Orthopaedics business add another moving part to the device story.
Talc Relief Meets a MedTech Question
Johnson & Johnson’s bull case rests on a talc resolution that removes an burden investors have carried for years. Duato’s closing pitch on the call leaned into that view: “Taken together, these drivers position Johnson & Johnson as one of the cleanest growth stories in healthcare.” Of the Abiomed slump, Schmid maintained, “We do not view these challenges as structural in nature and ones that will drive a long-term impact on the business.”
A skeptic’s case is that MedTech grew slowly enough to raise a question the medicines business doesn’t answer. Another open issue is how much deal-related expense remains, since management flagged continuing dilution from the Firefly Bio and Sail Biomedicines transactions next year.
What to Watch Next
Joseph Wolk, chief financial officer at Johnson & Johnson, said the talc resolution is trending toward its required participation threshold. Johnson & Johnson’s shareholders can watch for whether MedTech growth picks up in the coming quarter as the near-term headwinds management cited begin to moderate. Wolk also noted that the company’s path to double-digit growth does not assume any inorganic additions at this point.
Until MedTech rebounds and the talc deal is completed, investors may want to keep their exposure to Johnson & Johnson sized for continued swings around one-time charges.
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David Moadel is financial writer specializing in stocks, ETFs, options, precious metals, and Bitcoin. David has written well over 1,000 articles for leading online publications, helping investors understand markets, income strategies, and risk.His work has appeared in The Motley Fool, InvestorPlace, U.S. News & World Report, TipRanks, ValueWalk, Benzinga, Market Realist, TalkMarkets, Finmasters, 24/7 Wall St., and others.With a master’s degree in education, David has taught at the elementary, high school, and college levels. That teaching background shapes his writing style: clear, educational, and practical. David has also built a loyal social-media audience by providing trustworthy financial content on YouTube, X/Twitter, and StockTwits.
