Johnson & Johnson (JNJ) has became one of many market’s steadier outperformers, with shares up roughly 55% over the previous yr as buyers acquire confidence within the firm’s potential to develop past STELARA.
Now, Morgan Stanley believes the healthcare big should still have room to run. The agency not too long ago raised its worth goal on Johnson & Johnson, arguing that the corporate is proving it could possibly ship sturdy earnings progress even because it absorbs main patent headwinds.
Morgan Stanley sees upside forward for Johnson & Johnson
On April 14, 2026, Morgan Stanley raised its worth goal on Johnson & Johnson from $267 to $283 and reiterated its Obese ranking after the corporate posted a first-quarter beat and raised steerage.
The larger takeaway was how Morgan Stanley now seems to be valuing the enterprise.
Morgan Stanley lifted its 2026 earnings-per-share estimate from $11.73 to $11.82 and its 2027 estimate from $13.15 to $13.47. Then, it set its $283 worth goal by making use of a 20.3x P/E a number of to its Q2’27 to Q1’28 earnings-per-share estimate of $13.94. Put merely, the $283 worth goal resulted from $13.94 in anticipated earnings multiplied by a 20.3x P/E valuation a number of.
This reveals that Morgan Stanley is more and more snug valuing J&J as a enterprise with sturdy earnings progress quite than a slow-growing healthcare incumbent.
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That shift issues as a result of J&J’s valuation has been weighed down for years by uncertainty round its post-STELARA progress profile. Traders have questioned whether or not the corporate may proceed compounding after one in all its largest merchandise misplaced exclusivity.
Morgan Stanley’s up to date outlook suggests the agency believes J&J’s broader enterprise is robust sufficient to proceed rising by means of that transition.
Earnings beat improves the 2026 outlook
Johnson & Johnson strengthened that case on April 14 when the corporate reported first-quarter income of $24.1 billion and adjusted EPS of $2.70, each forward of expectations, and raised full-year steerage.
Administration now expects 2026 income of $100.3 billion to $101.3 billion and adjusted EPS of $11.45 to $11.65. The income outlook elevated by $300 million from the prior forecast, together with $200 million from portfolio efficiency and $100 million from overseas alternate.
Whereas the rise itself was comparatively modest, the timing sends an encouraging sign.
When administration raises steerage after the primary quarter, it normally displays confidence that enterprise traits are holding up higher than anticipated and that execution stays on monitor. It’s important to think about that they nonetheless have 3 extra quarters left within the yr, so a elevate in Q1 suggests they’re actually assured the remainder of the yr will play out higher than anticipated.
That stronger basis seemingly explains why analysts selected to lift ahead estimates following the quarter.
J&J’s broader progress story is strengthening
The strongest assist for the bull case is that J&J’s core enterprise continues rising regardless of dealing with a major patent headwind.
Within the first quarter of 2026, Progressive Medication grew 7.4% operationally, regardless of STELARA lowering section progress by roughly 920 foundation factors.
That means the underlying pharmaceutical portfolio is rising nicely, supported by merchandise together with DARZALEX, CARVYKTI, ERLEADA, RYBREVANT/LAZCLUZE, TREMFYA, and SPRAVATO.
MedTech additionally contributed stable progress, with operational gross sales rising 4.6% as electrophysiology, Abiomed, Shockwave, and trauma all carried out nicely.
J&J’s core enterprise is rising regardless of STELARA headwinds.
Jeff Schear Stringer/Getty Photos
The corporate has a number of companies and merchandise contributing significant progress throughout each pharma and medical units, which ought to assist a steadier earnings profile over time.
Pipeline progress additional reinforces that outlook. Latest milestones included ICOTYDE’s approval in plaque psoriasis, TECVAYLI plus DARZALEX FASPRO shifting into earlier-line a number of myeloma, VARIPULSE Professional in Europe, and TECNIS PureSee in U.S. cataracts.
Taken collectively, J&J seems more and more positioned to offset STELARA’s decline by means of a mix of latest launches, oncology progress, and energy in MedTech, giving the corporate a extra balanced and sturdy progress profile shifting ahead.
JNJ’s up 55% up to now yr. This is what may drive it greater
- Broader Progressive Medication progress, excluding STELARA, may present that patent erosion is turning into a contained product challenge quite than a company-wide progress downside.
- Sustained MedTech momentum in electrophysiology, Abiomed, Shockwave, and trauma may give JNJ a second dependable progress engine and cut back dependence on pharma alone.
- Sooner ramps in newer merchandise corresponding to ICOTYDE and RYBREVANT/LAZCLUZE may shorten the earnings bridge from STELARA erosion to renewed combine energy.
- Increased earnings estimates may assist a premium a number of if buyers acquire confidence that JNJ’s progress is repeatable quite than quarter-specific.
What may strain the inventory
- The largest threat is that STELARA erosion accelerates quicker than alternative progress, exposing the bounds of JNJ’s diversification.
- A slower-than-expected launch curve in key new merchandise would weaken the post-LOE bridge and put extra strain on the remainder of the portfolio.
- Any process softness in MedTech would take away an vital offset simply as pharma absorbs exclusivity losses.
- Even when estimates maintain shifting up, the inventory may stall if buyers proceed to worth JNJ as a defensive incumbent quite than a sturdy grower.
Key takeaways for JNJ inventory
Johnson & Johnson appears more and more positioned to develop by means of STELARA’s decline quite than merely survive it.
Morgan Stanley’s upgraded outlook suggests analysts are gaining confidence that J&J’s broader pharma portfolio, MedTech section, and newer product launches can collectively offset patent-related strain. If that pattern continues, the inventory could have room for additional upside as buyers start to worth J&J extra as a sturdy grower than a slow-moving defensive title.
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