J&J Up Around 17% in 3 Months: Should You Buy, Sell or Hold the Stock?

Core Insights - Johnson & Johnson's (JNJ) stock has increased by 16.7% over the past three months, primarily driven by strong third-quarter 2025 results that exceeded expectations in both revenue and earnings, along with an upward revision of sales guidance for the year [1][9]. Group 1: Company Performance - J&J's Innovative Medicine unit has shown consistent growth, with sales rising 3.4% in the first nine months of 2025 despite the loss of exclusivity for its product Stelara, which previously accounted for around 18% of the unit's sales [5][16]. - The Innovative Medicine segment achieved over $15 billion in sales for the second consecutive quarter, supported by key drugs such as Darzalex, Erleada, and Tremfya, as well as new products like Carvykti and Tecvayli [5][8]. - J&J anticipates accelerated growth in the Innovative Medicine segment in 2026, driven by both existing and newly launched products [6]. Group 2: Pipeline and Regulatory Developments - J&J has made significant progress in its pipeline, achieving key clinical and regulatory milestones, including approvals for new treatments like Inlexzo and Imaavy [7]. - The company believes that ten of its new products in the Innovative Medicine segment have the potential to generate peak sales of $5 billion [11]. Group 3: MedTech Segment and Strategic Moves - J&J's MedTech business has shown improvement, particularly due to acquisitions in the cardiovascular sector, and plans to separate its Orthopaedics franchise into a standalone company to focus on high-growth markets [12][13]. - The company expects better growth in the MedTech segment in 2026, driven by the adoption of new products and a focus on higher-growth markets [14]. Group 4: Challenges and Legal Issues - J&J faces challenges in China due to the volume-based procurement (VBP) program, which is impacting sales [15]. - The company is dealing with over 73,000 lawsuits related to its talc-based products, which allege health risks, and has recently shifted back to the traditional tort system after a failed bankruptcy strategy [19][20]. Group 5: Stock Performance and Valuation - J&J's stock has outperformed the industry, rising 42.5% year-to-date compared to a 16.0% increase in the industry [22]. - The stock is currently trading at a price/earnings ratio of 18.04, which is higher than the industry average of 17.04 and above its five-year mean of 15.65 [26]. Group 6: Earnings Estimates - The Zacks Consensus Estimate for J&J's 2025 earnings has increased slightly from $10.86 to $10.87 per share, while the estimate for 2026 has risen from $11.37 to $11.48 [29].