| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 93.02 | -40 |
| Intrinsic value (DCF) | 28.71 | -82 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 72.10 | -54 |
Johnson & Johnson (JNJ) is a global healthcare leader with a diversified business model spanning pharmaceuticals, medical devices, and consumer health products. Founded in 1886 and headquartered in New Brunswick, New Jersey, JNJ operates in three key segments: Pharmaceutical (47% of revenue), MedTech (30%), and Consumer Health (23%). The company's pharmaceutical segment includes blockbuster drugs like Stelara (immunology), Darzalex (oncology), and COVID-19 vaccines, while its MedTech division dominates in orthopedics, surgical robotics, and vision care through brands like DePuy Synthes and Acuvue. Consumer Health features household names such as Tylenol, Neutrogena, Band-Aid, and Listerine. With operations in 60+ countries and 30% of sales from emerging markets, JNJ combines innovation with global scale. The 2023 spin-off of Kenvue (consumer health) allows greater focus on higher-margin pharma and medtech segments. JNJ maintains AAA credit rating, 60+ consecutive years of dividend increases, and $14B+ annual R&D investment, positioning it as a defensive play in healthcare with balanced growth exposure.
Johnson & Johnson presents a compelling investment case as a high-quality defensive stock with growth optionality. Strengths include industry-leading pharmaceutical pipelines (particularly in oncology and immunology), durable MedTech market positions, and reliable cash flows supporting its 3.1% dividend yield (S&P 500 average: 1.4%). The company's AAA credit rating and 60-year dividend growth streak underscore financial resilience. Near-term risks include biosimilar competition for Stelara (2023-25) and potential talc litigation liabilities. At 15x forward P/E (below 10-year average of 16x), JNJ trades at a discount to pharma peers like Merck (18x) and Eli Lilly (45x). Investors gain exposure to healthcare innovation (CAR-T therapies, robotic surgery) while benefiting from recession-resistant demand. The 2023 Kenvue spin-off improves margins but reduces diversification. With $8B+ annual free cash flow and manageable leverage (1.5x net debt/EBITDA), JNJ remains a core holding for balanced portfolios.
Johnson & Johnson maintains competitive advantages through its three-pillar diversification, allowing cross-cycle stability when individual segments face headwinds. In Pharmaceuticals, JNJ's immunology and oncology franchises compete directly with AbbVie (Humira), Merck (Keytruda), and Bristol-Myers (Opdivo). While lacking Merck's dominant checkpoint inhibitor, JNJ leads in multiple myeloma (Darzalex) and autoimmune diseases (Tremfya). The MedTech division competes with Medtronic in cardiovascular and Stryker in orthopedics, differentiated by robotic surgery (Auris acquisition) and electrophysiology scale. Consumer Health (now Kenvue) trailed Procter & Gamble in marketing efficiency but owned category-defining brands. JNJ's real edge lies in its blended 29% operating margins (pharma: 35%, MedTech: 25%), outperforming pure-play device makers but lagging elite biopharmas. The company spends $14B annually on R&D (6th highest globally), with particular strength in translational research bridging pharmaceuticals and devices (e.g., drug-eluting stents). Geographic diversification (30% emerging markets revenue) provides growth levers peers like Eli Lilly lack. However, JNJ faces pipeline gaps in diabetes/obesity (vs. Novo Nordisk) and Alzheimer's (vs. Biogen). Its litigation overhang (talc, opioids) remains a unique liability versus cleaner peers.