Johnson & Johnson (JNJ) reported third-quarter 2026 results on Tuesday that beat Wall Street estimates, and the company raised its full-year sales and adjusted earnings guidance. The market's reaction? A 5.44% drop in the stock to $249.38, because apparently good news comes with a price tag attached.

Third-Quarter Earnings Beat Estimates

Adjusted earnings fell 7.5% year over year to $2.59 per share, but that still beat analysts' consensus estimate of $2.53. Sales rose 5.9% to $25.39 billion, topping the consensus estimate of $25.25 billion. Operational sales increased 6%, while adjusted operational sales grew 6.1%.

GAAP earnings totaled 9 cents per share, reflecting approximately $7 billion in charges related to a proposed talc litigation resolution, the acquisition of Firefly Bio and a strategic collaboration with Sail Biomedicines.

Cancer Drugs Drive Innovative Medicine Growth

Innovative Medicine sales increased 7.7% to $16.76 billion, with operational growth of 7.9%. Growth was driven by oncology treatments Darzalex, Carvykti, Tecvayli, Rybrevant/Lazcluze and Erleada. Immunology drug Tremfya and neuroscience treatments Spravato and Caplyta also contributed.

However, declining Stelara sales reduced growth by approximately 690 basis points. Sales of Simponi/Simponi Aria, Remicade, Imbruvica and Opsumit/Opsynvi also fell.

MedTech Faces International Headwinds

MedTech sales reached $8.64 billion, reflecting 2.5% operational growth. Electrophysiology products and Shockwave supported cardiovascular sales, while contact lenses and orthopedic trauma products also contributed.

However, management acknowledged weakness in cardiovascular and surgery businesses outside the U.S. The company said it is taking steps to improve performance while remaining confident in MedTech's long-term prospects.

Johnson & Johnson Raises 2026 Guidance

Johnson & Johnson raised its adjusted earnings guidance to $11.05-$11.15 per share from $10.96-$11.11, compared with the $11.08 consensus estimate. The company also increased its sales outlook to $101 billion-$101.40 billion from $100.8 billion-$101.40 billion, versus analysts' expectations of $101.29 billion.

CEO Joaquin Duato said the company remains on track to exceed $100 billion in annual revenue for the first time in its 140-year history. He also outlined Johnson & Johnson's ambition to become the world's leading oncology company by 2030, with projected oncology sales exceeding $50 billion.

During the earnings call, Johnson & Johnson Chief Financial Officer Joseph Wolk warned that the company's acquisition of Firefly Bio and collaboration with Sail Biomedicines are expected to reduce full-year 2027 adjusted earnings by a combined $1.36 per share. The deals are also expected to weigh on 2026 adjusted earnings by 64 cents per share. However, management remains confident in its long-term growth outlook, driven by investments in its drug pipeline.

JNJ Price Action: Johnson & Johnson shares were down 5.44% at $249.38 at the time of publication on Tuesday.