Johnson & Johnson

Year to date, the healthcare sector finds itself in the middle of the S&P 500’s pack. 10% gain. It’s still lagging YTD, but that lag is exactly what makes the group interesting right now. 02% year to date, while two of the three largest pharmaceutical names by market cap are trailing it. With healthcare flagged by analysts as an undervalued entry point heading into the second half, here are three mega-cap drug makers offering a rare mix of innovation exposure and income. Note that all three have rallied off spring lows, so the “beaten-down” label applies more to relative-to-market performance and prior 52-week highs than to outright drawdowns.

Eli Lilly ( NYSE:LLY | LLY Price Prediction ) is the cleanest example of a relative laggard. 73. The fundamentals are accelerating. 80 billion in Q1. 40 estimate. Eli Lilly raised its full-year 2026 revenue outlook to between $85 billion and $87 billion, after raising it in the wake of Q1 earnings to a range of $82 billion to $85 billion. Risk: Realized prices fell 13% due to rebates and NRDL inclusion in China, and the franchise still leans heavily on a small group of products vulnerable to future biosimilar competition. 90. The reason it still belongs on a value list is the forward valuation, which sits at 20x earnings.

68 estimate. 96 billion, TREMFYA jumped 68%, and CARVYKTI climbed 62%. ” Income investors get the headline draw. 34 per share quarterly, a 3% raise that marks 64 consecutive years of dividend increases. 3 billion. Risk: STELARA revenue collapsed 60% to $656 million on biosimilar competition, creating roughly a 920 basis point drag on Innovative Medicine. Ongoing litigation charges ($330 million in Q1) remain an overhang. 86 on Friday, Aug. 78% year to date, lagging the SPY despite a strong recent bounce. 84% in the past month, and the YTD shortfall is what keeps the valuation reasonable at 16x forward earnings.

Q1 2026 revenue grew 12% to $15 billion. 12 billion (up 23%), more than absorbing the Humira decline of 39%. Neuroscience grew 26%. 28. The income story is comparable to JNJ’s. 64 in 2025, with a yield near 3% and a 53-year consecutive increase streak. Risk: Humira biosimilar erosion is still accelerating, Imbruvica fell 25%, and acquired IPR&D charges of $744 million created a 41-cent per share drag in Q1. The CRL on trenibotulinumtoxinE pushes one near-term aesthetics catalyst out further. The second-half setup hinges on H2 earnings momentum, FDA progress on key pipeline programs (Foundayo uptake for Lilly, Skyrizi label expansions for AbbVie, CARVYKTI scaling for J&J), and whether sector rotation continues to favor defensives .

With Lilly and AbbVie still trailing the broader market and J&J adding a 64-year dividend streak to the mix, the group offers a reasonable risk profile for income-and-innovation investors heading into Q3.