Stock Analysis & Valuation Johnson & Johnson (JNJ.DE)

• Previous Close: €190.54
• Sector Valuation Confidence Level: High

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	110.40	-42
Intrinsic value (DCF)	75.03	-61
Graham-Dodd Method		n/a
Graham Formula	62.40	-67

Strategic Investment Analysis

Company Overview

Johnson & Johnson (JNJ.DE) is a global healthcare leader with a diversified business model spanning pharmaceuticals, medical devices, and consumer health products. Headquartered in New Brunswick, New Jersey, the company operates in three key segments: Consumer Health, Pharmaceutical, and MedTech. Its Consumer Health division includes iconic brands like NEUTROGENA, LISTERINE, and BAND-AID, catering to everyday wellness needs. The Pharmaceutical segment focuses on innovative treatments for conditions such as rheumatoid arthritis, cancer, and infectious diseases, including COVID-19. The MedTech segment provides advanced surgical, orthopedic, and vision care solutions, including the ACUVUE contact lens brand. With a history dating back to 1886, Johnson & Johnson has built a reputation for trust and innovation, serving retail, hospital, and professional healthcare markets worldwide. The company's broad portfolio and global reach position it as a resilient player in the healthcare sector, benefiting from long-term demographic trends like aging populations and rising healthcare demand.

Investment Summary

Johnson & Johnson presents a compelling investment case due to its diversified healthcare portfolio, strong brand equity, and consistent cash flow generation. The company's pharmaceutical segment, with blockbuster drugs like Stelara and Darzalex, provides high-margin growth, while its MedTech division benefits from innovation in surgical and orthopedic solutions. Consumer Health, though lower-margin, offers stability with household brands. Risks include patent expirations, regulatory scrutiny, and litigation related to talc products. However, J&J's robust balance sheet (€24.1B cash), disciplined capital allocation (€3.57/share dividend), and moderate beta (0.41) suggest defensive appeal. Investors should monitor pipeline productivity and spin-off execution (Kenvue separation) for future upside.

Competitive Analysis

Johnson & Johnson's competitive advantage lies in its 'triple-segment' diversification, which mitigates sector-specific risks. In Pharmaceuticals, it competes with scale and R&D depth (€88.8B revenue), though it trails Pfizer in COVID-19 vaccine commercialization. Its MedTech division rivals Abbott and Medtronic in innovation but leads in orthopedics and surgical aesthetics. Consumer Health, post-Kenvue spin-off, now focuses on higher-growth OTC categories, competing with Procter & Gamble in oral care and skin health. J&J's litigation overhang (talc, opioids) is a unique disadvantage versus cleaner peers like Roche. However, its €24.1B cash reserve provides M&A flexibility to bolster weak spots like cardiology devices. The company's global distribution network and hospital relationships are unmatched in MedTech, while its pharmaceutical commercial engine excels in oncology and immunology. Pricing pressure in biosimilars and elective procedure volatility post-pandemic remain challenges.

Major Competitors

• Pfizer Inc. (PFE): Pfizer leads in vaccine commercialization (Comirnaty COVID-19 vaccine) and has a stronger recent pipeline in mRNA technology, but lacks J&J's MedTech diversification. Its recent acquisition of Seagen strengthens oncology but exposes it to integration risks. Pfizer's dividend yield is higher, but growth is more volatile post-pandemic.
• Abbott Laboratories (ABT): Abbott rivals J&J in MedTech with leadership in diagnostics (Freestyle Libre) and structural heart devices. Its nutrition business provides consumer health overlap, but Abbott lacks J&J's pharmaceutical scale. Abbott's emerging market footprint is stronger, with 40% sales from high-growth regions versus J&J's ~25%.
• Medtronic plc (MDT): Medtronic is the pure-play MedTech leader with dominance in cardiac devices (pacemakers) and spine solutions, competing directly with J&J's Ethicon division. Its R&D spend is higher as % of sales (8.5% vs J&J's 6.2%), but it lacks J&J's pharmaceutical cash flows to cushion procedure volume swings.
• Novartis AG (NVS): Novartis is a pharma peer with best-in-class margins (31% operating margin vs J&J's 25%) and leadership in innovative drugs like Cosentyx. However, it exited consumer health (Sandoz spin-off), removing a diversification buffer. Novartis' gene therapy pipeline is superior but carries higher clinical trial risks.
• Procter & Gamble (PG): P&G competes in consumer health with oral care (Crest) and feminine care (Always) but lacks J&J's pharmaceutical expertise. Its distribution and brand power in emerging markets are superior, but healthcare is only ~10% of sales versus J&J's 100% focus. P&G's marketing efficiency (lower SG&A) is a key advantage.