JNJ
Johnson & Johnson$243.45
Sell
Target $194.48
Report: Mar 07, 2026Healthcare • Drug Manufacturers - General • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$243.45-20.1%
Rec: SellConviction: High
Entry Target
N/A
N/A
Fair Value
$194.48
(20% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$251.71
52 Week Low$146.12
Avg. 3 Month Volume8.29M
Efficiency
LTM Gross Margin67.8%
LTM EBITDA Margin35.0%
LTM EBIT Margin27.0%
LTM Operating Margin26.4%
LTM ROA10.7%
LTM ROE26.3%
LTM ROIC34.7%
LTM ROCE18.4%
Capital Structure
Market Cap (MM)$542.4B
Enterprise Value (MM)$575.7B
Shares Outstanding2.41B
Total Debt (MM)$54.99B
Cash & Equivalents (MM)$21.69B
LTM Net Debt (MM)$33.30B
LTM Net Debt/EBITDA1.0x
Growth
TTM Rev. Growth7.9%
Last 3-Yr Rev. CAGR0.0%
Last 3-Yr EBITDA CAGR14.1%
Last 3-Yr EPS CAGR21.7%
Valuation
Street Target Price$249.27
LTM EV/Revenue6.0x
LTM EV/Gross Profit8.8x
LTM EV/EBIT22.2x
LTM EV/EBITDA17.1x
LTM P/E25.8x
LTM EV/FCF32.4x
LTM P/FCF30.5x
LTM P/TB5.3x
LTM P/B6.7x
Dividend Yield2.3%
Payout Ratio59.6%
Executive SummarySituation: Current price is $243.45 versus fair value $194.48 (-20.1% expected return), and valuation confidence is stable. Debate: Bull case depends on Stelara Biosimilar Market Entry As biosimilars enter the market more aggressively, the 620-basis-point revenue headwind will become a visible drag on top-line growth, forcing a re-evaluation of the 'catapult' narrative. Bear case centers on Moat Erosion via Biosimilars The mechanism is a permanent impairment of pricing power as Stelara and Xarelto face low-cost competition, leading to margin compression and lower ROIC. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
The MedTech segment becomes a high-growth engine through the integration of Shockwave and Abiomed, driving double-digit segment growth. The oncology pipeline, led by Darzalex (+24.1% growth), successfully offsets the Stelara revenue cliff.
Bear Case
Talc litigation results in a multi-billion dollar settlement that exceeds current accruals and impairs the AAA credit rating. Stelara biosimilar erosion is more aggressive than the projected 620-basis-point headwind, leading to absolute revenue contraction.
Key Catalysts
Near-Term (0-6 months)Impact: Critical
Stelara Biosimilar Market Entry As biosimilars enter the market more aggressively, the 620-basis-point revenue headwind will become a visibl...
Mid-Term (6-18 months)Impact: High
Talc Litigation Settlement or Verdict A major verdict or a comprehensive settlement agreement would provide clarity on the multi-billion dol...
Long-Term (18+ months)Impact: Moderate
JNJ is relevant for analysis now because it is trading near all-time highs ($243.45) despite a doubling of net debt and a looming patent cli...
Primary Risks
Concern: High
Moat Erosion via Biosimilars The mechanism is a permanent impairment of pricing power as Stelara and Xarelto face low-cost competition, lead...
Concern: High
Legal Liability Escalation The mechanism is a multi-billion dollar cash outflow from talc litigation that impairs the balance sheet and thre...
Concern: Medium
The stewardship verdict is 'Adequate but Misaligned.' While the board is exceptionally high-quality, featuring former CEOs of Lockheed Marti...
Recent Activity
2025-07-16SEC Filing (8-K)
+6.19%Johnson & Johnson reports 2025 Q2 results with 5.8% sales growth and raises full-year outlook
2025-04-01Press Release
-7.59%Johnson & Johnson To Return To Tort System To Defeat Meritless Talc Claims
2023-07-20SEC Filing (8-K)
+6.07%Johnson & Johnson reports 2023 Q2 results with 6.3% sales growth and raises full-year guidance
Valuation Table
9.8/10Decision Grade
Scenario Range
$133
Bear
$185
Base
$229
Bull
$243