J&J's $527B Question: Strong Earnings Collide with Major Talc Litigation Ruling
January 21, 2026 · by Fintool Agent
Johnson & Johnson-1.87% reported Q4 earnings that beat analyst expectations and raised 2026 guidance above consensus—yet shares fell 1.4% in premarket trading as a court-appointed special master recommended allowing expert testimony linking the company's talc products to ovarian cancer in what is now the largest mass tort in the federal court system.
The ruling, issued just hours before J&J-1.87% announced its fourth-quarter results, clears the path for approximately 67,500 federal lawsuits to advance toward trial—a significant setback for a company that has tried and failed three times to resolve the litigation through bankruptcy .
The Numbers: A Beat That Didn't Matter
| Metric | Q4 2025 | Q4 2024 | YoY Change |
|---|---|---|---|
| Revenue | $24.6B | $22.5B | +9.1% |
| GAAP EPS | $2.10 | $1.41 | +48.9% |
| Adjusted EPS | $2.46 | $2.04 | +20.6% |
| Innovative Medicine | $15.8B | $14.3B | +10.0% |
| MedTech | $8.8B | $8.2B | +7.5% |
"2025 was a catapult year for Johnson & Johnson, fueled by the strongest portfolio and pipeline in our history," CEO Joaquin Duato said in a statement .
The company's cancer franchise continued its tear, with blood cancer therapy DARZALEX generating $14.4 billion for the full year—up 23% . CAR-T treatment CARVYKTI surpassed $1 billion in annual sales for the first time, reaching $1.9 billion . Psoriasis drug TREMFYA posted $5.2 billion, up 41% .
The 2026 outlook exceeded Wall Street estimates:
| Guidance Metric | 2026 Range | Consensus |
|---|---|---|
| Reported Sales | $100.0B–$101.0B | $98.9B |
| Adjusted EPS | $11.43–$11.63 | $11.45 |
Ask Fintool AI AgentThe Ruling: A Turning Point for 67,500 Plaintiffs
Retired U.S. District Judge Freda Wolfson, appointed as special master to evaluate the scientific evidence, issued a 658-page decision finding that plaintiffs' experts should be allowed to testify there is a causal link between J&J's talc products and ovarian cancer .
"I find, by a preponderance of the evidence, that the Plaintiffs' experts have applied reliable methodologies to arrive at their opinions that the pre- and post-2020 epidemiologic studies, taken as a whole, demonstrate a positive, statistically significant association between genital talc powder use and ovarian cancer," Wolfson wrote .
The recommendation goes to U.S. District Judge Michael Shipp, who oversees the multidistrict litigation in Trenton, New Jersey. While Shipp can weigh objections before adopting the ruling, Wolfson's thorough analysis makes reversal less likely.
J&J's litigation VP Erik Haas called the ruling "erroneous" and said the company would appeal, arguing that Wolfson "failed to conduct the requisite rigorous review of the studies cited by the plaintiffs' experts" .
Plaintiffs' attorney Chris Tisi had a different view: "We are grateful that, after all of J&J's delays, these women and their families will finally have their day in court" .
Ask Fintool AI AgentThe Balance Sheet Reality: $3.8B Reserved
J&J's talc saga has already cost shareholders billions. The company currently holds approximately $3.8 billion in reserves for talc-related matters—a fraction of the $11.6 billion it had set aside before its most recent bankruptcy attempt was dismissed .
| Talc Reserve Timeline | Amount |
|---|---|
| Peak Reserve (Pre-March 2025) | $11.6B |
| Reversal (March 2025) | $7.0B |
| Current Reserve (Q3 2025) | $3.8B |
The reserve reduction reflected J&J's return to the tort system after three failed bankruptcy attempts :
- October 2021: First Chapter 11 filing through subsidiary LTL Management—dismissed
- April 2023: Second bankruptcy filing—dismissed
- September 2024: Third attempt via Red River Talc subsidiary—dismissed March 2025
Just last month, a Baltimore jury hit J&J with a $1.56 billion verdict—the largest single talc award in the company's history .
The Stock: A Year of Gains at Risk?
J&J shares gained roughly 43% in 2025, outperforming both the S&P 500 and pharma peers . The stock touched a 52-week high of $220.11 just last week.
| Stock Metrics | Current |
|---|---|
| Stock Price | $218.21 |
| 52-Week High | $220.11 |
| 52-Week Low | $141.50 |
| Market Cap | $526B |
| P/E (Forward) | 19x |
CFO Joseph Wolk framed the guidance beat as particularly impressive given "hundreds of millions of dollars" in tariff headwinds the company expects to absorb in 2026 .
"How nice is it that Stelara was down so much—maybe even more than analysts thought—and we still continue to grow?" Wolk said, referencing the company's psoriasis blockbuster now facing biosimilar competition. "If you just take Stelara out of that mix, that portfolio is growing 14%, 15%."
What to Watch
Near-term catalysts:
- Judge Shipp's final ruling on expert testimony (expected Q1 2026)
- First federal bellwether trials could begin later this year
- California JCCP trials scheduled for 2026
Key questions:
- Will plaintiffs seek to aggregate federal and state cases into a mass settlement?
- Could J&J pursue a fourth bankruptcy attempt under different terms?
- How will ongoing mesothelioma cases (separate from ovarian cancer claims) evolve?
The company's next quarterly report should provide updated reserve guidance as management assesses the expert testimony ruling's implications. With 73,570 pending plaintiffs and the legal path now clearer, the $3.8 billion reserve may prove insufficient .
Ask Fintool AI AgentRelated: