Key Points
Johnson & Johnson has crushed the market over the past year.
The healthcare giant faces some challenges that could harm its results.
However, Johnson & Johnson's business looks strong enough to overcome them.
- 10 stocks we like better than Johnson & Johnson ›
While artificial intelligence (AI) stocks are dominating debates and headlines on Wall Street, companies in other sectors can offer something that high-growth AI-focused corporations can't: stability in an otherwise volatile market.
Consider a healthcare giant like Johnson & Johnson (NYSE: JNJ). Over the past year, it has quietly outperformed most members of the Magnificent Seven, with its shares rising 53% over the trailing 12-month period. But is the pharmaceutical leader still attractive after this run? Let's find out whether Johnson & Johnson is a buy, hold, or sell in 2026.
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Why Johnson & Johnson might run into headwinds
Despite strong recent performances, some will point to multiple challenges Johnson & Johnson is facing. First, several of its medicines have been targeted by government-led drug price negotiations. This will likely lead to lower sales for these therapies than the company would have generated otherwise. There is also the threat of patent cliffs. Last year, Johnson & Johnson lost patent exclusivity in the U.S. for Stelara, an immunology drug, forcing the company to compete with biosimilars.
Even beyond patent cliffs, Johnson & Johnson faces stiff competition for some products whose sales are moving in the wrong direction as a result. One such example is Imbruvica, a cancer drug. Lastly, Johnson & Johnson is still dealing with thousands of lawsuits from plaintiffs who claim that its talc-based products gave them cancer. Can Johnson & Johnson perform well amid these challenges?
A resilient business
One of Johnson & Johnson's best assets is its vast portfolio of medicines across many therapeutic areas. That ensures that, even with competition -- from biosimilars or otherwise -- its sales and earnings generally move in the right direction. That's what happened last year, even with declining revenue from Stelara, Imbruvica, and others, Johnson & Johnson posted strong results. And the company's guidance for the fiscal year 2026 implies it will perform well, too.
Johnson & Johnson's diversification, including within its medical device division, where it is close to launching a robotic-assisted surgery device that will create more growth opportunities, is also a powerful hedge against drug price negotiations. Further, the company has a rock-solid balance sheet, with the highest credit rating available, evidence that it can survive its legal troubles.
Finally, Johnson & Johnson is an excellent income stock. With 63 consecutive years of dividend increases, the company is a Dividend King (meaning it has raised its dividends for at least 50 consecutive years). So, is Johnson & Johnson a buy, sell, or hold? For long-term income seekers, the company is a solid buy.
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Prosper Junior Bakiny has positions in Johnson & Johnson. The Motley Fool recommends Johnson & Johnson. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
