Johnson & Johnson (NYSE: JNJ) raised its full-year guidance again in its third-quarter earnings report on October 13. Wall Street’s response was to sell the stock. JNJ stock fell 5.6% for the session, closing at $248.90.
The top line was strong. Revenue rose 5.9% to $25.4 billion, ahead of the roughly $25.3 billion analysts expected. Operational growth was 6%, and U.S. sales jumped 9.1%.
Management also raised its outlook again. The company now expects reported sales of $101.2 billion at the midpoint. It raised adjusted earnings per share (EPS) guidance by six cents to $11.10 per share.
So why the selling? Some of the numbers needed explaining. GAAP earnings fell to nine cents per share from $2.12 a year ago. That reflects a one-time charge for the proposed talc settlement and two strategic deals. Adjusted EPS of $2.59 also fell from last year because of those deals.
None of that changes the core business. It did give investors a reason to lock in gains after a strong 12 months.
This is a familiar pattern for JNJ. The stock often drifts lower after earnings, even good ones. Investors who react to the drop often miss the bigger story.
My view is simple: know what you own. Johnson & Johnson is a dividend king with a growing business and a growing payout. This pullback looks like a buying opportunity.
Why Johnson & Johnson Stock Fell After a Solid Quarter
The quarter was not perfect. The weakest spot was MedTech, where sales grew just 2.5%. That trailed the 7.9% operational growth in Innovative Medicine by a wide margin. Electrophysiology, Shockwave, and contact lenses drove gains, but not enough to impress.
International sales were also soft, rising only 1.5%. Meanwhile, biosimilar competition for Stelara cut about 6.9 percentage points from Innovative Medicine growth.
Then there’s the talc litigation. In July, J&J proposed a $5.5 billion settlement covering about 76,000 ovarian cancer claims. The charge landed this quarter. The deal still needs at least 95% of claimants to participate, so it isn’t final.
Finally, the acquisition of Firefly Bio and a collaboration with Sail Biomedicines weighed on adjusted earnings. Adjusted EPS fell 7.5% year-over-year. Full-year adjusted EPS is now projected to grow just 2.9%.
Investors who skim headlines saw a 96% drop in net earnings. For many, that was enough to sell.
Know What You Own: A Dividend King Built for Long-Term Investors
Johnson & Johnson has raised its dividend for 64 consecutive years. The quarterly payout is $1.34, or $5.36 per share annually. That’s a yield of about 2.16% at recent prices.
Consider what that streak has survived. The talc lawsuits have been in the headlines for 15 years. The dividend kept rising anyway.
This is also a different company than it was a few years ago. J&J separated its consumer health business into Kenvue in 2023. What remains is a leaner, higher-margin company focused on pharmaceuticals and medical devices. A planned separation of the orthopaedics business should sharpen that focus further.
The pipeline gives investors reasons for patience. The FDA authorized the OTTAVA robotic surgical system this quarter. IMAAVY won approval for a rare autoimmune blood disorder. Five-year data showed CARVYKTI produced treatment-free remissions in half of patients in early-line multiple myeloma.
The cash engine is intact, too. Free cash flow is about $15.1 billion through three quarters.
Over the last five years, JNJ stock has gained roughly 55%. Add the dividend, and long-term owners have been well rewarded.
Reasonable Risks for Trading JNJ, But Not for Owning It
There are legitimate reasons to be cautious with JNJ in the short term. MedTech growth remains modest. Stelara erosion will keep weighing on reported growth. The talc settlement could still face hurdles if claimant participation falls short.
Earnings growth this year is also muted. Acquisition costs mean adjusted EPS is expected to rise less than 3% in 2026.
For traders, those are real issues. They can keep the stock range-bound for weeks or months.
For long-term owners, the picture is different. Revenue is growing about 7% this year. Management says it has a clearer line of sight to double-digit growth by the end of the decade. The dividend is well covered by free cash flow.
The risks here are about timing, not the thesis. That’s the difference between trading a stock and owning one.
JNJ Stock Technical Analysis: Testing Support After a Sharp Pullback
The chart shows a stock that ran from around $190 last October to a high near $280 in September. Some profit-taking was overdue.
Today’s drop came on above-average volume of 7.7 million shares. The stock is trading near $247, well below its 50-day moving average of $265.
There are warning signs. Shares had already slipped below the 50-day average in early October. A brief rebound toward that line failed before earnings. The MACD is below zero and below its signal line, which shows bearish momentum.
Support is the key level to watch. The $245 area held in July. Below that, the $240 zone from the spring is the next floor.
A hold above $240 would support the profit-taking case. Patient investors can scale into positions rather than buy all at once.
Bottom Line: JNJ’s Dip Is a Chance to Buy Quality
Johnson & Johnson delivered higher sales and raised guidance again. The market focused on a weak MedTech quarter, talc charges, and deal-related earnings pressure.
Those are fair concerns for short-term traders. They don’t change what long-term investors own: a dividend king with 64 years of increases, a strong pipeline, and steady cash flow.
JNJ has a habit of drifting lower after earnings. For investors who know what they own, that habit has often created buying opportunities.
This looks like another one.
