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

• Previous Close: CHF135.40
• Sector Valuation Confidence Level: High

Valuation method	Value, CHF	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	10.50	-92
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Johnson & Johnson (JNJ) is a global healthcare leader operating in three key segments: Consumer Health, Pharmaceuticals, and Medical Devices. Headquartered in New Brunswick, New Jersey, and listed on the Swiss Exchange (SIX), JNJ serves a broad market with well-known brands like NEUTROGENA, TYLENOL, BAND-AID, and ACUVUE. The company’s diversified portfolio spans baby care, oral care, over-the-counter medicines, prescription drugs, and advanced medical devices, catering to consumers, healthcare professionals, and institutions. With a strong R&D focus, JNJ maintains a competitive edge in immunology, oncology, and medical technology. Its global distribution network ensures broad market penetration, reinforcing its position as a dominant player in the healthcare sector. Founded in 1886, JNJ continues to innovate while delivering consistent shareholder returns through dividends and growth.

Investment Summary

Johnson & Johnson presents a compelling investment case due to its diversified healthcare portfolio, strong brand equity, and consistent financial performance. In FY 2023, the company reported CHF 85.15B in revenue and CHF 35.15B in net income, with a diluted EPS of CHF 13.72. Its robust operating cash flow (CHF 22.79B) supports continued R&D investment and shareholder returns, evidenced by a dividend of CHF 37.54 per share. However, risks include regulatory pressures, patent expirations in its Pharmaceutical segment, and potential litigation costs. The company’s high total debt (CHF 30.43B) warrants monitoring, but its strong cash position (CHF 21.86B) provides financial flexibility. Long-term investors may benefit from JNJ’s defensive positioning in healthcare and innovation-driven growth.

Competitive Analysis

Johnson & Johnson’s competitive advantage lies in its diversified business model, combining stable Consumer Health brands with high-growth Pharmaceutical and Medical Devices segments. Its strong R&D pipeline (particularly in immunology and oncology) and global supply chain enhance market leadership. In Consumer Health, JNJ competes with Procter & Gamble and Unilever, leveraging trusted brands like NEUTROGENA and BAND-AID. In Pharmaceuticals, it faces rivals such as Pfizer and Roche, where its biologic drugs (e.g., STELARA) provide pricing power. The Medical Devices segment competes with Medtronic and Abbott in orthopedics and cardiovascular devices, with JNJ’s ACUVUE dominating the contact lens market. JNJ’s scale allows for cost efficiencies, while its direct-to-consumer and institutional distribution networks create barriers to entry. However, pricing pressures in generics and regulatory hurdles in medical technology pose challenges. The company’s recent spin-off of Kenvue (Consumer Health) aims to sharpen focus on higher-margin Pharma and MedTech segments.

Major Competitors

• Pfizer Inc. (PFE): Pfizer is a key competitor in Pharmaceuticals, with blockbuster drugs like Comirnaty (COVID-19 vaccine) and Eliquis. Its strong vaccine portfolio and mergers (e.g., Seagen) bolster growth, but reliance on pandemic-related revenue declines poses a risk. JNJ’s broader healthcare diversification gives it an edge in stability.
• Roche Holding AG (ROG.SW): Roche competes with JNJ in biopharmaceuticals (e.g., cancer drugs like Herceptin) and diagnostics. Its oncology pipeline is robust, but lacks JNJ’s Consumer Health buffer. Roche’s diagnostics segment provides diversification, though JNJ’s MedTech reach is more comprehensive.
• Medtronic plc (MDT): Medtronic rivals JNJ in Medical Devices, particularly in cardiovascular and surgical solutions. Its strong R&D competes with JNJ’s electrophysiology products, but JNJ’s ACUVUE dominance in vision care and broader Pharma segment provide a more balanced revenue mix.
• Abbott Laboratories (ABT): Abbott competes in Medical Devices (e.g., Freestyle Libre glucose monitors) and diagnostics. Its nutrition segment overlaps with JNJ’s Consumer Health, but JNJ’s Pharma segment offers higher margins. Abbott’s emerging market penetration rivals JNJ’s global footprint.
• Procter & Gamble (PG): P&G competes in Consumer Health with brands like Vicks and Oral-B. While P&G has stronger household penetration, JNJ’s healthcare specialization (e.g., medical-grade NEOSPORIN) provides differentiation. P&G’s lack of Pharma/MedTech limits its healthcare upside.