Johnson & Johnson 3Q26: Bullish outlook; but FY27 EPS reset

Yesterday before the open, JNJ reported a solid Q3, with 6.1% organic sales growth and a 3% EPS beat. Innovative Medicine strength and U.S. momentum offset a ~1.5% MedTech miss driven by international headwinds and Abiomed weakness. Management nudged up FY26 guidance and remains confident in double-digit sales growth by the end of the decade, though FY27 EPS growth could be flattish due to (1) a tough comp (extra week in FY26), (2) substantial LOE headwinds, and (3) a step-up in Firefly/Sail dilution. Adj EPS of $2.59 beat by 3%; FY26 organic sales guidance was raised to 6.4%-6.8% and EPS guidance to $11.05-$11.15. We model 5.1% organic growth in FY27 and ~2% EPS growth to $11.29, 8.5% below prior consensus ($12.34). We rate JNJ Market-Perform with a price target of $270 (up from $261).