J&J earnings test whether pharma pipeline justifies record stock rally

Johnson & Johnson reports second-quarter earnings on Wednesday at a critical juncture. The healthcare conglomerate must prove that surging demand for its top drugs is driving its recent stock rally, not just a broad market shift away from technology names.

Shares climbed over 14% in June, hitting roughly $267 last Tuesday to set a new record. "The majority of the driver has been this market rotation out of tech and into healthcare to move more defensively," said Leerink analyst David Risinger. However, the stock has pulled back slightly alongside the broader healthcare sector following a weak preliminary report from hospital operator HCA Healthcare and escalating geopolitical tensions.

Investors will focus primarily on J&J's Innovative Medicine segment, which generated roughly two-thirds of its $94 billion revenue last year. The immediate priority is whether key growth drugs can offset the steep decline of Stelara, which lost exclusivity in 2025. Stelara sales plunged 62% in the first quarter, and Wall Street expects a similarly sized drop for the second quarter.

J&J's oncology portfolio is expected to carry that weight. Consensus estimates peg second-quarter sales of blood-cancer therapy Darzalex at $4.24 billion, implying 19.8% annual growth. "We have the bold ambition to become the No. 1 company in oncology by 2030," CEO Joaquin Duato said in May, noting the company is investing heavily "to get closer" to eliminating cancer.

Beyond cancer, the immunology franchise led by Tremfya is forecast to reach $1.78 billion in the quarter. Analysts are also looking for early prescription data for Icotyde, a daily pill approved in mid-March to treat psoriasis. Goldman Sachs analysts, who hold a $275 price target on the stock, noted a recent expert survey supports J&J's belief that Icotyde could eventually achieve at least $10 billion in annual revenue.

The medical technology division faces tougher near-term comparisons. Cardiovascular care grew 10.5% last quarter, but HCA's warning about declining surgical procedure volumes raises questions about J&J's surgery and orthopaedics units. J&J announced in October 2025 that it would separate the orthopaedics business to streamline its focus.

The stock traded around $254 on Tuesday afternoon, exactly matching the average analyst price target. "I'm not going to go out on a limb and say buy J & J until I know more," said Jim Cramer on Tuesday. For the roughly 70% of analysts with buy-equivalent ratings to push the stock higher, the company needs to show that its underlying business is as resilient as its defensive reputation. As RBC Capital analyst Shagun Singh noted, J&J operates in "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."