Johnson & Johnson shares fell 6.8% by 12:30 p.m. ET Tuesday despite beating third-quarter earnings expectations and raising 2026 guidance. Adjusted earnings were $2.59 per share against an expected $2.53, and sales grew 5.9%. However, adjusted profit fell 7.5% and GAAP profit dropped to $0.09 per share, down 96%, due to a one-time charge for the proposed talc litigation resolution and deals involving Firefly Bio and Sail Biomedicines. Free cash flow rose more than 6% to $15.1 billion, and the company now expects 2026 sales to grow 7.4% to $101.2 billion with adjusted earnings of about $11.10 per share. The author argues the stock's valuation of more than 22x adjusted earnings and nearly 29x free cash flow is too high for roughly 7% growth, and rates it a 'sell.'
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