J&J falls despite a beat-and-raise quarter. Why we're raising our price target anyways

Breaking news from the markets: Johnson & Johnson shares fell Tuesday despite a mostly strong second-quarter earnings report and an increase to its full-year guidance. We're not rattled by the market reaction and believe the reasons to like J & J remain intact. Revenue in the second quarter rose 6.

6% year over year to $25. 31 billion, beating the LSEG consensus of $25. Adjusted earnings per share (EPS) in the quarter totaled $2.

Economic Details

85 estimate, LSEG data showed. Shares of J & J are off over 2% in afternoon trading. But keep in mind: Going back to the third quarter of 2021, J & J shares have reacted to earnings with a less than 1% move on average.

Put another way, this is not a stock that makes its move on the back of earnings announcements. It's a stock that gains on consistent execution over time. What we saw in the results and heard on Wednesday's call gives us increased confidence that the consistent execution we've come to expect from this management team will continue.

Throughout the spring, healthcare stocks like J & J fell out of favor as the market was dominated by the AI trade. Then, as that trade wobbled during June, we saw a rotation into left-behind defensive stocks, which included J & J (and fellow Club name Cardinal Health , for that matter). Those rotation winners lost a bit of steam in recent days.

Analyst Views

It remains to be seen what kind of market we will have in the coming months into year-end. But in a diversified equity portfolio, we believe J & J is a stock worth owning. Why we own it Johnson & Johnson has a robust pipeline and a strong line-up of drugs on the market.

That includes Icotyde, an oral IL-23 inhibitor for the treatment of moderate-to-severe plaque psoriasis. Approved in March, Icotyde has the potential to be a major growth driver in the coming years. Most recent buy: June 1, 2026 Initiation date: April 8, 2026 Competitors: AbbVie, Merck, Bristol Myers, Medtronic (among others) JNJ YTD mountain Johnson & Johnson's year-to-date stock performance.

Bottom line Johnson & Johnson delivered a solid — though not sterling — quarter. In addition to strong top-line performance both at home and abroad, which resulted in better-than-expected earnings, management raised its outlook for the full year. What's especially notable is that the magnitude of the full-year earnings raise is greater than the size of the second-quarter beat.

Economists are analysing what the news means for the markets.