J&J’s core innovative medicine products continue to drive growth; Goldman Sachs raises 12-month target price to $282

Overview

This is a Goldman Sachs post-2Q26 earnings model update report on Johnson & Johnson. The report notes that J&J beat expectations for a sixth consecutive quarter and modestly raised 2026 guidance, but the stock fell after the results, reflecting that market expectations had already been high. Goldman’s core view is that acceleration at the enterprise level is still mainly driven by Innovative Medicine, while the short-term slowdown in MedTech has not changed the judgment that the stock’s direction is more dependent on innovative medicine product cycles.

Core views

Goldman Sachs continues to view Innovative Medicine as the core of the buy thesis. Tremfya remains strong in IBD and dermatology immunology, with its 2026 revenue forecast raised about 10% to $8.6bn; although Icotyde’s 2026 revenue forecast is lowered to $300mn due to a higher proportion of free-drug patients, early demand indicators are strong, and peak sales forecast is raised from $7.7bn to $8bn; Inlexzo accelerated after obtaining a J-code, with its 2026 revenue forecast raised from $300mn to $325mn. On MedTech, Abiomed and Electrophysiology dragged 2Q performance, but other divisions improved sequentially, and management still expects acceleration in 2H26.

Analysis framework

The report uses a combination of earnings-call tracking, product-level revenue forecasts, visible consensus comparisons, KOL research, pipeline catalyst review, and a P/E valuation framework, with a focus on assessing whether J&J’s innovative medicine product cycles can offset MedTech and enterprise-level crosscurrents.

Methodology notes

• Valuation methodsP/E multiple valuation

  20x P/E applied to Q5-Q8 EPS

  Goldman Sachs uses Q5-Q8 EPS as the basis and applies a 20x P/E multiple to derive the 12-month target price of $282; this increase mainly comes from rolling forward the valuation reference period and updating EPS forecasts.

• Forecast revisionProduct-level model update

  Product-level revenue and EPS forecast updates

  The report updates forecasts item by item for Tremfya, Icotyde, Inlexzo, Spravato, Caplyta, and other products, and aggregates the changes into the FY26 revenue, margin, and EPS model.

• Industry researchKOL survey

  Key opinion leader survey

  The peak sales view for Icotyde references a recent KOL survey, which shows its eventual market share in moderate-to-severe psoriasis could reach about 15%-20%.

• Factor frameworkGS Factor Profile

  Growth, Financial Returns, Multiple, and Integrated percentiles

  Goldman Sachs discloses that its factor framework compares the stock versus the market and peers across dimensions such as growth, financial returns, and valuation multiples, but the investment conclusion in this report mainly comes from product cycles and model updates.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Johnson & Johnson (JNJ.US)

  Covered name and core recommended asset

  Strengths

  Strong Innovative Medicine product cycle, with Tremfya, Icotyde, Inlexzo, Spravato, and Caplyta providing growth momentum; the company has ample cash and free cash flow.

  Weaknesses

  MedTech growth slowed in 2Q, with weaker performance from Abiomed and Electrophysiology; early revenue recognition for some new products is affected by free-drug usage and reimbursement timing.

  Comparison

  The report believes the stock’s direction depends more on Innovative Medicine performance than on short-term MedTech volatility; JNJ’s share price has been highly correlated with the revenue upgrade trend over the past year.

  Risks

  Slower-than-expected new-product ramp, talc litigation payouts above expectations, and deterioration in the macro and tariff environment.

• Tremfya

  Core growth product in J&J’s immunology business

  Strengths

  Delivered +71% operational growth in 2Q and led in new patient-start share in UC and Crohn’s.

  Weaknesses

  May face future competitive pressure if ABBV’s Skyrizi subcutaneous induction therapy is approved in Crohn’s.

  Comparison

  The report says Tremfya again exceeded Goldman Sachs and market expectations, making it an important reflection of Innovative Medicine momentum.

  Risks

  Approval of competing products, pricing pressure, and shifts in IBD market share.

• Icotyde

  J&J’s newly launched immunology product and long-term peak-sales driver

  Strengths

  11,000 patient starts, more than 18,000 prescriptions, 6,000 independent prescribers, and commercial coverage above 50% within 90 days.

  Weaknesses

  A higher proportion of early free-drug patients leads to the 2026 revenue forecast being lowered from $350mn to $300mn.

  Comparison

  Goldman Sachs raises peak sales forecast from $7.7bn to $8bn and believes that if psoriasis share reaches 15%-20%, the psoriasis indication alone could support peak revenue above $10bn.

  Risks

  Speed of reimbursement conversion, proportion of free-drug use, and clinical readouts in PsA and IBD.

• Inlexzo

  Incremental growth product in bladder cancer

  Strengths

  Revenue accelerated after receiving a J-code; management said quarterly revenue more than doubled, and new-patient implants grew 75% sequentially.

  Weaknesses

  The current approved indication covers only about 5% of J&J’s target NMIBC population.

  Comparison

  The report believes that if SunRISe-5 and SunRISe-3 succeed, they could materially expand the opportunity and support management’s peak sales framework of more than $5bn.

  Risks

  SunRISe-5 data readout and regulatory filing falling short of expectations.

• MedTech

  J&J’s second-largest business segment and a short-term drag

  Strengths

  Surgery, Ortho, and Vision accelerated sequentially, and management said the surgical-volume environment remains stable with no broad demand slowdown seen.

  Weaknesses

  Abiomed’s U.S. business shifted from prior mid-teens growth to a 5% decline, and Electrophysiology global growth slowed from 9% in 1Q to 3%.

  Comparison

  The report believes MedTech recovery would help stabilize enterprise growth, but the stock’s direction still depends more on Innovative Medicine.

  Risks

  Insufficient Abiomed recovery, China VBP pressure, and product-mix transition toward higher-growth categories not happening fast enough.

Key data

• 12-month target price$282Raised from the previous $275, based on a 20x P/E multiple and Q5-Q8 EPS.
• Reference current price$247.02Price for Johnson & Johnson disclosed on the report page.
• FY26 total revenue forecast$101.797bnRaised 0.4% from the previous $101.365bn.
• FY26 Innovative Medicine revenue forecastabout $66.1bnThe model table shows the Innovative Medicine forecast raised by about 1.0%-1.1%.
• FY26 MedTech revenue forecast$35.662bnLowered 0.6% from the previous $35.870bn, mainly due to weaker Abiomed outlook.
• FY26/FY27/FY28 EPS forecast$11.65 / $13.25 / $14.98Previously $11.55 / $13.36 / $14.83, respectively.
• Tremfya 2026 revenue forecast$8.6bnRaised about 10% from the previous forecast; delivered +71% operational growth in 2Q.
• Icotyde 2026 revenue forecast$300mnLowered from $350mn, reflecting more early patients using temporary free drug; peak sales forecast raised to $8bn.
• Inlexzo 2026 revenue forecast$325mnRaised from $300mn, reflecting sequential revenue acceleration and upward consensus pressure.
• MedTech 2026/2027 global adjusted operational growth forecast5.8% / 4.4%2026 forecast lowered from 6.4% to 5.8%, while 2027 remains at 4.4%.

Impact & implications

The report’s implication for J&J stock is positive overall: the short-term share price pullback reflects overly high expectations and concerns about MedTech growth more than a break in the core buy thesis. If Tremfya, Icotyde, Inlexzo, Imaavy, and neuroscience products continue to deliver, J&J’s revenue upgrade trend may continue and support valuation and target price. Conversely, if new-product ramp-up is slower than expected, MedTech recovery is insufficient, or litigation and macro pressures intensify, EPS and valuation multiple could come under pressure.

Risks

• New-product ramp-up may be slower than Goldman Sachs expects, leading to insufficient offset to declines in mature products.
• Uncertainty related to talc litigation may bring higher-than-expected payouts and compress the valuation multiple.
• Macro environment, tariffs, and external operating pressures may cause downward revisions to revenue and profit forecasts.
• If MedTech growth fails to recover in 2H26, it may weaken the quality of enterprise-level growth.
• Timing of the Milvexian AF program readout may be delayed from the prior YE 2026 expectation to late 2026 or early 2027.

What to watch

• FDA approval outcome for Imaavy in the wAIHA indication in 2H26.
• Data readout from Inlexzo Ph3 SunRISe-5 in BCG experienced NMIBC and potential regulatory filing.
• Ph3 data for Icotyde in Psoriatic Arthritis.
• Ph3 MonumenTAL-6 data for Talvey + Darzalex Faspro in relapsed/refractory multiple myeloma.
• Ph3 data readout for Caplyta in bipolar mania.
• FDA approval for the OTTAVA robotic surgery system.
• Timing of Milvexian AF and SSP Ph3 readouts and incremental information from BMY earnings call.
• JNJ Enterprise Business Review on December 8 regarding long-term guidance and strategy.
• Structural arrangements and updates around the DePuy Synthes spin-off before and after mid-2027.