Johnson & Johnson shares closed lower on Friday, shedding 1.8% to finish at $242.49, as the market reacted to reports the healthcare giant is considering a major divestiture. According to a Reuters report citing a source familiar with the matter, J&J is preparing a potential sale of its DePuy Synthes orthopedics unit, a transaction that could be valued at over $20 billion. The company has not publicly commented on the speculation.
Strategic Shift for Medical Device Portfolio
The potential sale marks a significant strategic pivot. Previously, Johnson & Johnson had outlined plans to separate DePuy Synthes through a spin-off within an 18 to 24-month timeframe. Chief Financial Officer Joe Wolk had indicated that no material updates were expected until mid-2026. DePuy, which generated $9.3 billion in sales in 2025, is a cornerstone of J&J's medical device segment, producing hip, knee, and shoulder implants and competing directly with firms like Stryker and Zimmer Biomet.
The unit has, however, been associated with thousands of hip implant lawsuits, presenting potential legal complexities for any buyer. Analysts suggest that private equity groups or strategic acquirers would likely factor these liabilities, along with operational integration, into their valuation and deal structure. A sale would accelerate J&J's efforts to streamline its corporate structure and focus on businesses with more predictable growth profiles, but it also raises questions about the future growth trajectory of the remaining MedTech division without one of its most established brands.
Market Context and Investor Sentiment
The stock's decline on Friday contrasted with a broader market advance. While the S&P 500 index rose 0.69%, J&J shares fell $4.40 from their opening price of $246.47, trading between $240.43 and $246.90 during the session. Peer pharmaceutical stocks showed mixed performance: Pfizer declined 0.78%, while AbbVie edged up 0.21%. With U.S. markets closed Saturday, the next clear indication of investor appetite for the story will come when trading resumes on Monday, February 23.
Deal speculation in the medical technology sector often moves on minimal confirmation, and investors are now keenly watching for any signals that solidify the timeline or reveal interested parties. The process remains in early stages and could conclude without a transaction, revert to the original spin-off plan if valuations shift, or involve protracted negotiations where buyers demand price concessions or specific legal protections.
Positive Immunology Data Offsets News Flow
In a separate development, Johnson & Johnson released new long-term clinical data for its immunology drug Tremfya (guselkumab) in ulcerative colitis. The results, announced Saturday ahead of the ECCO 2026 medical conference, showed that 80.8% of patients achieved clinical remission at week 140 in the QUASAR long-term extension study.
Dr. Laurent Peyrin-Biroulet, a paid consultant for J&J and an investigator on the study, stated the data "strengthen confidence in the long-term use of TREMFYA." Company executive Esi Lamousé-Smith highlighted the strong endoscopic outcomes—remission observed via scope examination. While clinical updates alone rarely drive immediate share price movement for a diversified giant like J&J, they contribute to the longer-term narrative about whether newer pharmaceutical products can sustain growth as older blockbusters face patent expirations.
Upcoming Catalysts and Management Commentary
Investors are anticipating further clarity from company leadership at several scheduled public forums. Management is slated to participate in a fireside chat at the TD Cowen 46th Annual Health Care Conference on March 3, followed by a presentation at the Barclays Global Healthcare Conference on March 10. These events are likely to draw direct questions regarding the DePuy process, even if executives maintain a "no update" stance.
The next definitive milestone for the stock is April 14, when Johnson & Johnson is scheduled to report its first-quarter 2026 financial results and host a conference call at 8:30 a.m. Eastern Time. This earnings call represents the next probable opportunity for investors to receive more concrete details on corporate strategy—or a firm refusal to provide them. For a stock often viewed as a bellwether for the healthcare sector, these pipeline and portfolio signals carry added weight when the market is already assessing a significant strategic shift.
The reported exploration of a DePuy sale underscores J&J's ongoing effort to reshape its portfolio, but the path forward is uncertain. The company continues to navigate broader litigation risks that can swiftly impact market sentiment. The coming weeks will be critical for gauging investor reaction to both the potential portfolio transformation and the strengthening data for its key immunology asset.
