Drugs beat with 6% growth but devices lagged at 2.5%. Deal costs leave 2027 profit flat near $11.08, so at 22 times profit the shares track the market.
Key points
- $25.40 billion in Q3 2026 sales grew 6.0% operationally as drug strength offset soft devices.
- $11.10 a share in 2026 profit is new guidance midpoint excluding one-time items, up from July 2026.
- $1.36 a share in 2027 deal costs from two biotech deals wipes out underlying growth next year.
The call
The pullback still leaves little room for error. At $249.11 on Oct 13 2026 the shares trade at 22.4 times profit in 2026. That price needs growth to land in profit in 2027.
Quarterly sales in 2026 show steady growthSEC XBRL and Oct 13 8-K. As of Oct 13 2026.
I expect flat profit instead of growth. I forecast $11.08 a share in profit in 2027 excluding one-time items. That reflects 6% underlying growth in 2027 offset by $1.36 a share of deal costs in 2027.
Valuation
| Driver | Figure |
|---|
| 2026 profit guidance midpoint | $11.10 a share in 2026 |
| Add back 2026 deal drag | $0.64 a share in 2026 |
| Underlying growth at 6% in 2027 | $12.44 a share in 2027 |
| Less 2027 deal costs | $1.36 a share in 2027 |
| 2027 profit forecast | $11.08 a share in 2027 |
| At 22 times profit, target | $243.76 a share in 12 months |
Deal costs erase underlying growth in 2027Jul 29 8-K dilution and Oct 13 guide. As of Oct 13 2026.
A large drug maker growing sales mid single digits in 2026 deserves 22 times profit in 2027. That multiple means price paid per dollar of profit. With 2.1% downside plus a 2.2% dividend yield in 2026, a hold fits.
Risks
- Stelara and generic erosion outruns Tremfya and Darzalex growth, which I would track in quarterly Innovative Medicine sales in 2027.
- Heart device softness spreads beyond Asia-Pacific, which I would track in quarterly electrophysiology and Abiomed volumes in 2027.
- Talc accord fails to reach 95% participation, which I would track in legal reserve updates and court filings in 2027.
What would change my mind
I would turn positive if device sales reaccelerate for two quarters in 2027 while profit in 2027 guides above $11.60 a share.