Johnson & Johnson (JNJ) has turned into one of the market’s steadier outperformers, with shares up roughly 55% over the past year as investors gain confidence in the company’s ability to grow beyond STELARA.Now, Morgan Stanley believes the healthcare giant may still have room to run. The firm recently raised its price target on Johnson & Johnson, arguing that the company is proving it can deliver durable earnings growth even as it absorbs major patent headwinds.Morgan Stanley sees upside ahead for Johnson & JohnsonOn April 14, 2026, Morgan Stanley raised its price target on Johnson & Johnson from $267 to $283 and reiterated its Overweight rating after the company posted a first-quarter beat and raised guidance.The bigger takeaway was how Morgan Stanley now appears to be valuing the business.Morgan Stanley lifted its 2026 earnings-per-share estimate from $11.73 to $11.82 and its 2027 estimate from $13.15 to $13.47. Then, it set its $283 price target by applying a 20.3x P/E multiple to its Q2’27 to Q1’28 earnings-per-share estimate of $13.94. Put simply, the $283 price target resulted from $13.94 in expected earnings multiplied by a 20.3x P/E valuation multiple.This shows that Morgan Stanley is increasingly comfortable valuing J&J as a business with durable earnings growth rather than a slow-growing healthcare incumbent.More Johnson & Johnson:Robotic surgery fuels Johnson & Johnson dividend growth outlookRecession-proof Dividend King offers safe 2.2% yieldFollow the Charts: Where to Trim Tech and Embrace RotationThat shift matters because J&J’s valuation has been weighed down for years by uncertainty around its post-STELARA growth profile. Investors have questioned whether the company could continue compounding after one of its largest products lost exclusivity.Morgan Stanley’s updated outlook suggests the firm believes J&J’s broader business is strong enough to continue growing through that transition.Earnings beat improves the 2026 outlookJohnson & Johnson strengthened that case on April 14 when the company reported first-quarter revenue of $24.1 billion and adjusted EPS of $2.70, both ahead of expectations, and raised full-year guidance.Management now expects 2026 revenue of $100.3 billion to $101.3 billion and adjusted EPS of $11.45 to $11.65. The revenue outlook increased by $300 million from the prior forecast, including $200 million from portfolio performance and $100 million from foreign exchange.While the increase itself was relatively modest, the timing sends an encouraging signal.When management raises guidance after the first quarter, it usually reflects confidence that business trends are holding up better than expected and that execution remains on track. You have to consider that they still have 3 more quarters left in the year, so a raise in Q1 suggests they’re really confident the rest of the year will play out better than expected.That stronger foundation likely explains why analysts chose to raise forward estimates following the quarter.J&J’s broader growth story is strengtheningThe strongest support for the bull case is that J&J’s core business continues growing despite facing a significant patent headwind.In the first quarter of 2026, Innovative Medicine grew 7.4% operationally, despite STELARA reducing segment growth by roughly 920 basis points.That suggests the underlying pharmaceutical portfolio is growing well, supported by products including DARZALEX, CARVYKTI, ERLEADA, RYBREVANT/LAZCLUZE, TREMFYA, and SPRAVATO.MedTech also contributed solid growth, with operational sales rising 4.6% as electrophysiology, Abiomed, Shockwave, and trauma all performed well.
J&J’s core business is growing despite STELARA headwinds.Jeff Schear Stringer/Getty Images
The company has multiple businesses and products contributing meaningful growth across both pharma and medical devices, which should support a steadier earnings profile over time.Pipeline progress further reinforces that outlook. Recent milestones included ICOTYDE’s approval in plaque psoriasis, TECVAYLI plus DARZALEX FASPRO moving into earlier-line multiple myeloma, VARIPULSE Pro in Europe, and TECNIS PureSee in U.S. cataracts.Taken together, J&J appears increasingly positioned to offset STELARA’s decline through a combination of new launches, oncology growth, and strength in MedTech, giving the company a more balanced and durable growth profile moving forward.JNJ’s up 55% in the past year. Here’s what could drive it higherBroader Innovative Medicine growth, excluding STELARA, could show that patent erosion is becoming a contained product issue rather than a company-wide growth problem.Sustained MedTech momentum in electrophysiology, Abiomed, Shockwave, and trauma could give JNJ a second reliable growth engine and reduce dependence on pharma alone.Faster ramps in newer products such as ICOTYDE and RYBREVANT/LAZCLUZE could shorten the earnings bridge from STELARA erosion to renewed mix strength.Higher earnings estimates could support a premium multiple if investors gain confidence that JNJ’s growth is repeatable rather than quarter-specific.What could pressure the stockThe biggest risk is that STELARA erosion accelerates faster than replacement growth, exposing the limits of JNJ’s diversification.A slower-than-expected launch curve in key new products would weaken the post-LOE bridge and put more pressure on the rest of the portfolio.Any procedure softness in MedTech would remove an important offset just as pharma absorbs exclusivity losses.Even if estimates keep moving up, the stock could stall if investors continue to value JNJ as a defensive incumbent rather than a durable grower.Key takeaways for JNJ stockJohnson & Johnson looks increasingly positioned to grow through STELARA’s decline rather than simply survive it.Morgan Stanley’s upgraded outlook suggests analysts are gaining confidence that J&J’s broader pharma portfolio, MedTech segment, and newer product launches can collectively offset patent-related pressure. If that trend continues, the stock may have room for further upside as investors begin to value J&J more as a durable grower than a slow-moving defensive name.Related: Apple stock sees stunning Wall Street twist before earnings