RBC Capital Markets has issued a bullish outlook on Johnson & Johnson (J&J), saying the healthcare giant's pharmaceutical division can sustain its momentum into 2027. The bank also expects J&J's medical devices unit to recover in the second half of this year, setting the stage for two major robotics launches in 2026.
Drug Growth Beyond Stelara
RBC pointed to J&J's second-quarter results, which showed sales excluding the blockbuster drug Stelara grew 14% year-on-year. Stelara, a treatment for psoriasis and Crohn's disease, has long been a key profit driver for J&J, but it now faces biosimilar competition. The bank's analysis suggests that J&J's pipeline of newer drugs is picking up the slack, with eight brands posting double-digit sales gains in the quarter.
This is a critical transition for J&J. Stelara generated about $10.4 billion in sales in 2023, but its patent protection is eroding. Investors have been watching closely to see whether J&J's other drugs—such as Tremfya (for psoriasis) and Darzalex (for multiple myeloma)—can fill the gap. RBC's view is that they can, and that the Innovative Medicine division's growth trajectory remains intact through at least 2027.
MedTech Recovery and Robotics Pipeline
On the medical devices side, RBC expects a rebound in the second half of this year. J&J's MedTech unit, which includes surgical tools, orthopedics, and vision care, has faced headwinds from supply chain issues and slower hospital spending. The bank believes those pressures are easing, and that the division will return to growth in H2.
Looking further ahead, J&J is preparing to launch two surgical robots: Ottava and Monarch. Ottava is a general-purpose surgical robot designed to compete with Intuitive Surgical's da Vinci system, while Monarch is a platform for lung cancer diagnostics and treatment. Both are slated for launch in 2026. RBC sees these as potential catalysts that could boost MedTech revenue and margins.
Robotic surgery is a fast-growing market, and J&J's entry could reshape the competitive landscape. For context, GE Aerospace recently lifted its 2026 profit outlook on strong service demand, showing how industrial and healthcare companies alike are betting on technology-driven growth.
What This Means for Investors
For everyday investors, RBC's analysis offers a lens into J&J's ability to navigate a patent cliff. The company's diversified business model—spanning pharmaceuticals, medical devices, and consumer health (now spun off as Kenvue)—has long been a draw for those seeking stability. But with Stelara's exclusivity fading, the question has been whether J&J can sustain its earnings growth.
RBC's answer appears to be yes, provided the drug pipeline delivers and MedTech recovers. The bank's outlook suggests that J&J's revenue mix is shifting, with newer drugs and robotics taking on greater importance. That could support the stock's valuation, which has historically traded at a premium to the broader market due to its defensive qualities.
However, investors should note that the MedTech recovery is not guaranteed. Hospital budgets remain tight in some regions, and regulatory approvals for the robots are still pending. Similarly, the drug pipeline faces competition from other pharma companies. As Europe's earnings growth hides energy dependence, J&J's results show how company-specific factors can drive performance beyond broad economic trends.
RBC's view is one of several analyst opinions, and investors should consider the full range of forecasts. J&J is scheduled to report third-quarter results in October, which will provide the next update on whether the trends RBC highlights are materializing.
Broader Context
J&J's story is part of a larger narrative in healthcare: the shift from blockbuster drugs to specialized therapies and technology-enabled procedures. Companies like TSMC posted a record 77% profit surge driven by AI chip demand, showing how technology is reshaping industries. In healthcare, robotics and precision medicine are creating new growth avenues.
For J&J, the next few years will test whether its R&D investments pay off. The Ottava and Monarch robots represent a bet that J&J can compete in the high-stakes surgical robotics market, which is currently dominated by Intuitive Surgical. If successful, these launches could provide a multi-year growth driver for the MedTech division.
In the meantime, the drug business remains the core earnings engine. RBC's confidence in that engine lasting into 2027 is a positive signal, but investors will want to see sustained execution in the quarters ahead.
