Johnson & Johnson has a chance to show it’s more than just a rotation winner
Johnson & Johnson shares have showed signs of life ahead of earnings. For the stock to keep running, the healthcare giant needs to show investors that its most promising drugs are still gaining steam. J & J’s climb back to record highs exactly one week ago was largely fueled by a marketwide rotation into lagging healthcare stocks and away from big winners tied to the AI infrastructure buildout. Since then, though, the stock has lost a few percentage points, in line with the S & P 500’s healthcare sector , as the Iran war heated up again and dragged down large swaths of the market outside energy and tech. A weak preliminary earnings report from hospital operator HCA Healthcare weighed on the group in Tuesday’s session. Nevertheless, Wednesday morning’s second-quarter earnings report is J & J’s chance to prove that its businesses — from pharma to medical technology — are performing well enough for investors to stick around and bet on more upside from here. According to FactSet, the average price target among analysts of around $254 does not signal a lot of daylight, as that’s right around where the stock traded Tuesday afternoon. Our price target is a bit higher at $265 — a couple of bucks shy of last Tuesday’s highs. We’re among like minds with our buy-equivalent 1 rating ; nearly 70% of analysts who cover the stock feel the same. For now, though, it’s too close to earnings for Jim Cramer to recommend any moves. “I’m not going to go out on a limb and say buy J & J until I know more,” he said during Tuesday’s Morning Morning. As of Monday’s close, shares of J & J had climbed over 14% since the start of June, one of the Club’s top gainers during that stretch. One of only two stocks better is fellow Club stock Cardinal Health , which was up roughly 19%, underscoring the market’s rotation into the very healthcare names left behind in this spring’s blistering rally in chip stocks and other AI hardware makers. Through Monday, the healthcare sector was up 8.7% since June began, easily outperforming a basket of chip stocks , which had dropped 2.7%. Healthcare is a classic defensive sector, so as the AI trade wobbled and investors booked profits in first-half winners, more money flowed in the direction of companies like J & J, Cardinal and our other Club healthcare name Eli Lilly . Cardinal and Lilly also set fresh record closes last week, before retreating modestly, as J & J has, in recent sessions. J & J went nearly four months between record closes. After finishing at $248.56 on March 2, the stock would pull back nearly 11% until bottoming on May 8. It took out its old high on June 26 and kept climbing to close roughly $267 apiece last Tuesday. We’ve owned J & J since early April . “The majority of the driver has been this market rotation out of tech and into healthcare to move more defensively,” said Leerink biopharma analyst David Risinger in an interview about the sector’s recovery rally. “But in addition, the underlying fundamentals have been encouraging recently.” In other words, companies including J & J have the chance to validate their comebacks this earnings season. JNJ YTD mountain J & J’s stock performance so far in 2026. One of J & J’s most important drugs is blood-cancer therapy Darzalex, which in the first quarter grew 18%, excluding foreign-exchange benefits, to $3.96 billion. It is currently J & J’s top-selling drug by a wide margin and a crucial part of the company’s efforts in oncology. Consensus for the second quarter is $4.24 billion, implying 19.8% annual growth, according to FactSet. Darzalex “remains the gold standard” in treating multiple myeloma, J & J CEO Joaquin Duato said on J & J’s April earnings call. In a May interview on CNBC, Duato said, “We have the bold ambition to become the No. 1 company in oncology by 2030,” explaining that J & J is heavily investing its resources “to get closer” to the goal of eliminating cancer. Carvykti is another key J & J cancer drug, albeit much smaller than Darzalex. Carvykti grew 57% last quarter to $597 million, and analysts expect 49% growth in Q2 to $654 million. While both are used to treat multiple myeloma, Carvykti is a type of personalized treatment that helps a patient’s immune system attack the cancer. Think of Carvykti as a more specialized therapy, while Darzalex is an antibody used as a backbone treatment. Patients with multiple myeloma typically end up taking multiple types of medications , explaining why J & J has a broad portfolio for the disease. Away from cancer, investors will focus on the performance of J & J’s immunology franchise, which is currently led by Tremfya, its second biggest drug behind Darzalex. Tremfya, which belongs to a class known as IL-23 inhibitors, is used to treat plaque psoriasis, psoriatic arthritis, and digestion-related ailments under the umbrella of inflammatory bowel disease. In the first quarter, the injectable Tremfya grew revenue by 64% to $1.6 billion. The company said Tremfya is now the leader in new U.S. patient starts in inflammatory bowel disease, helping drive this wave of growth. For the second quarter, analysts expect Tremfya sales of $1.78 billion, implying 50% year-over-year growth, according to FactSet. J & J’s updates on the recently launched Icotyde will be important to the Wall Street reaction. Like Tremfya, Icotyde blocks the IL-23 receptor to treat inflammation. The big difference: Icotyde is the first daily pill in the IL-23 inhibitor class. For the second quarter, Icotyde’s revenue contribution will likely be minimal, given the Food and Drug Administration only arrived in mid-March . It’s currently approved to treat moderate to severe plaque psoriasis, with the goal of more indications in the future. J & J is counting on the drug to be its next cash cow and has said it can be one of its biggest drugs ever . That’s why investors want the latest on prescription trends and traction in the psoriasis market. In a note to clients last week, analysts at Goldman Sachs said their recent survey of experts backs up J & J’s belief that Icotyde could eventually do at least $10 billion in annual revenue. To be sure, the analysts, who have a $275 price target and buy rating on J & J, said the company would likely not break out Icotyde revenue this quarter since it’s still so early in the launch. Darzalex, Tremfya and Icotyde are all part of J & J’s Innovative Medicine segment — the official name of its pharmaceutical business. Innovative Medicines made up roughly two-thirds of the $94 billion that J & J generated last year. The remaining third came from MedTech, home to its medical devices and surgical products businesses. Innovative Medicine and MedTech are the heart of J & J following the 2023 separation of its consumer-health division, which sold products including Band-Aid, Tylenol, Neutrogena and its namesake baby powder. That business became a standalone company called Kenvue , which is in the process of being acquired by Kleenex maker Kimberly-Clark . Innovative Medicine is not only much bigger than MedTech, but it’s also faster growing, expanding at a 7.4% clip in the first quarter, compared with 4.6% for MedTech. In the three months ended in March, J & J said Innovative Medicine had 10 drugs growing at a double-digit percentage. One drug excluded from that list is Stelara, a former blockbuster for J & J that treats similar conditions as Tremfya. However, J & J lost its exclusivity for the drug in 2025, leading to a steep decline in sales due to competition from cheaper biosimilar alternatives. Stelara’s first-quarter revenue of $656 million fell 62% from a year earlier. Wall Street expects a similar-sized decline for the second quarter, according to FactSet. RBC Capital analyst Shagun Singh said in an interview that she will be focused on the Innovative Medicine growth rate minus Stelara. More generally, Singh said she likes how J & J has positioned itself across both remaining segments. “These are non-elective categories where if you get a heart attack, you have to go there. If you have cancer, you have to take your drugs,” said Singh, who has a buy-equivalent rating and a $265 price target on the stock. Within J & J’s MedTech business, Singh noted that cardiovascular care is the most important end market right now. It grew 10.5% last quarter, versus 1.2% for surgery, 3.6% for vision and 3.2% for orthopaedics. Investors will be closely watching the MedTech results in light of HCA Healthcare’s Tuesday warning about a decline in surgical procedure volume. In October 2025, J & J announced that it would separate its orthopaedics business, which makes products used in joint reconstructions, among others. J & J said it was considering multiple options, including a potential sale or spinoff. No matter which path J & J chooses, the result is that the remaining company should have a streamlined focus and improved growth rate — a combination that could result in Wall Street assigning a higher valuation to the stock. In general, we’re bullish on Johnson & Johnson’s commercial lineup and next-generation pipeline, which is why we chose the company to replace rival Bristol-Myers Squibb when we exited that position in April. Our decision was about upgrading the quality of the companies in our portfolio, which has proven to be the right move thus far. During our June Monthly Meeting , Jim Cramer made the case for investors to buy J & J — as it traded in the $230s — by emphasizing its quality. He said when high-quality stocks trade lower, absent a material change to their earnings outlooks, that means they’re getting cheaper. “Buy it if you don’t own any,” he said. At this point, with earnings arriving Wednesday morning, and shares at higher levels, we recommend waiting until we see the numbers before taking any action. But the opportunity to grab more shares might come knocking again if an encouraging report Wednesday is met with more profit-taking. We’ll find out soon enough. (Jim Cramer’s Charitable Trust is long JNJ, CAH, and LLY. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. 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