Intrinsic Value Johnson & Johnson (JNJ.SW)

• Previous Close: CHF135.40
• Intrinsic Value: n/a
• Upside potential: n/a%

Stock Valuation Context

Business Model And Market Position

Johnson & Johnson operates as a diversified healthcare leader with a robust presence across three key segments: Consumer Health, Pharmaceuticals, and Medical Devices. The company’s Consumer Health division leverages trusted brands like NEUTROGENA, TYLENOL, and BAND-AID to serve everyday wellness needs, while its Pharmaceutical segment focuses on high-growth therapeutic areas such as immunology, oncology, and infectious diseases. The Medical Devices segment, anchored by products like ACUVUE contact lenses and orthopaedic solutions, reinforces its leadership in elective and essential healthcare. J&J’s vertically integrated model—spanning R&D, manufacturing, and global distribution—enables it to maintain pricing power and resilience against sector volatility. Its scale and diversified portfolio mitigate risks from patent cliffs or regulatory pressures in any single segment. The company’s strategic focus on innovation, evidenced by its pipeline in oncology and immunology, positions it to capitalize on aging demographics and rising global healthcare expenditure. With a century-long reputation for quality and a direct-to-consumer and B2B distribution network, J&J commands premium pricing and customer loyalty across markets.

Revenue Profitability And Efficiency

In FY 2023, Johnson & Johnson reported revenue of CHF 85.2 billion, with net income of CHF 35.2 billion, reflecting a strong 41.3% net margin. Operating cash flow stood at CHF 22.8 billion, underscoring efficient working capital management. Capital expenditures of CHF 4.5 billion indicate disciplined reinvestment, with a focus on high-return projects in pharmaceuticals and medical devices.

Earnings Power And Capital Efficiency

Diluted EPS of CHF 13.72 highlights J&J’s earnings robustness, supported by its high-margin Pharmaceutical segment. The company’s capital efficiency is evident in its ability to generate substantial free cash flow (CHF 18.4 billion after capex), which funds dividends, share buybacks, and strategic acquisitions without compromising balance sheet health.

Balance Sheet And Financial Health

J&J maintains a solid financial position with CHF 21.9 billion in cash and equivalents against CHF 30.4 billion in total debt, reflecting a conservative leverage profile. Its investment-grade credit rating and strong liquidity provide flexibility for R&D and M&A, even in volatile macroeconomic conditions.

Growth Trends And Dividend Policy

The company has demonstrated consistent growth, driven by its Pharmaceutical segment’s innovation pipeline and Medical Devices’ recovery post-pandemic. A dividend of CHF 37.54 per share and a long history of increases underscore its commitment to shareholder returns, supported by reliable cash flows.

Valuation And Market Expectations

Market expectations for J&J remain positive, with its diversified model and pipeline offsetting sector-specific risks. The stock’s low beta suggests resilience, while its valuation reflects premium pricing for stable earnings and dividend growth.

Strategic Advantages And Outlook

J&J’s competitive moat lies in its brand equity, global scale, and R&D prowess. Near-term headwinds include pharmaceutical pricing pressures and device supply chain normalization, but its diversified portfolio and innovation focus position it for sustained long-term growth in global healthcare markets.

Sources

Company annual report (10-K), investor presentations