Bore Family Office
Valuation Report — Johnson & Johnson (JNJ) • March 6, 2026
3-Stage DDM (Ke) • Discount Rate: 6.21% • Current Price: $240.40
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Johnson & Johnson was founded in 1886 in New Brunswick, NJ. After spinning off its consumer products
segment as Kenvue (KVUE) in 2023, J&J is now a pure pharmaceutical/medical technology company.
J&J serves patients in ~60 disease areas across oncology, immunology, neuroscience, cardiovascular,
pulmonary hypertension, and medical technology (orthopedics, electrophysiology, vision).
| Segment |
Key Products |
FY2025 Rev |
% Total |
YoY Growth |
Op Margin |
| Innovative Medicine (Pharma) |
Darzalex, Stelara, Xarelto, Tremfya, Tecvayli |
~$59B |
~63% |
+6% |
~33% |
| MedTech |
Orthopedics, electrophysiology, vision, surgery |
~$35B |
~37% |
+4% |
~18% |
Key growth drivers: Darzalex (myeloma) at $12B+ revenue growing 20%+;
Tecvayli and Talvey (bispecific antibodies) in hematology; Tremfya (psoriasis) gaining market share from Humira;
Shockwave (cardiovascular, acquired 2024). Stelara faces biosimilar headwinds from 2025.
Pipeline includes Rybrevant+Lazertinib (lung cancer), several ADC programs.
Key risks: Talc litigation — $9.1B proposed global settlement pending court approval.
IRA drug pricing reform impact on Xarelto/Darzalex. Stelara biosimilar erosion (~$10B at risk).
Government pricing pressure on US pharma industry broadly.
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|
| Revenue ($M) | $78,740 | $79,990 | $85,159 | $88,821 | $94,193 |
| EBITDA ($M) | $27,224 | $26,925 | $28,693 | $28,143 | $32,790 |
| Operating Income ($M) | $19,834 | $19,955 | $21,207 | $20,804 | $25,287 |
| Net Income ($M) | $20,878 | $17,941 | $35,153 | $14,066 | $26,804 |
| EPS (diluted) | $7.81 | $6.73 | $13.72 | $5.79 | $11.03 |
| Free Cash Flow ($M) | $19,758 | $17,185 | $18,248 | $19,842 | $19,698 |
| Annual DPS | $4.190 | $4.450 | $4.700 | $4.910 | $5.200 |
| Total Debt ($M) | — | — | — | — | — |
| Rev YoY Growth | — | +1.6% | +6.5% | +4.3% | +6.0% |
⚙️ Ke (DDM)
| Input | Value | Notes |
|---|
| Risk-Free Rate (Rf) | 4.30% | 10-yr US Treasury yield |
| Beta (β) | 0.347 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 6.21% | Ke = Rf + β × ERP |
📈 DDM Scenarios
📋 Full 10-Year Projection Tables
Bear Scenario
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|
| Year 1 | Stage 1 | $5.408 | $5.092 | $5.09 |
| Year 2 | Stage 1 | $5.624 | $4.986 | $10.08 |
| Year 3 | Stage 1 | $5.849 | $4.882 | $14.96 |
| Year 4 | Stage 1 | $6.083 | $4.781 | $19.74 |
| Year 5 | Stage 1 | $6.327 | $4.681 | $24.42 |
| Year 6 | Stage 2 | $6.516 | $4.540 | $28.96 |
| Year 7 | Stage 2 | $6.712 | $4.402 | $33.36 |
| Year 8 | Stage 2 | $6.913 | $4.269 | $37.63 |
| Year 9 | Stage 2 | $7.121 | $4.140 | $41.77 |
| Year 10 | Stage 2 | $7.334 | $4.015 | $45.79 |
| Terminal | — | TV=$202.63 | PV(TV)=$110.93 (71% of IV) | |
Base Scenario
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|
| Year 1 | Stage 1 | $5.616 | $5.288 | $5.29 |
| Year 2 | Stage 1 | $6.065 | $5.377 | $10.66 |
| Year 3 | Stage 1 | $6.551 | $5.467 | $16.13 |
| Year 4 | Stage 1 | $7.075 | $5.560 | $21.69 |
| Year 5 | Stage 1 | $7.641 | $5.653 | $27.34 |
| Year 6 | Stage 2 | $8.023 | $5.589 | $32.93 |
| Year 7 | Stage 2 | $8.424 | $5.525 | $38.46 |
| Year 8 | Stage 2 | $8.845 | $5.462 | $43.92 |
| Year 9 | Stage 2 | $9.287 | $5.400 | $49.32 |
| Year 10 | Stage 2 | $9.751 | $5.338 | $54.66 |
| Terminal | — | TV=$312.90 | PV(TV)=$171.30 (76% of IV) | |
Bull Scenario
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|
| Year 1 | Stage 1 | $5.824 | $5.483 | $5.48 |
| Year 2 | Stage 1 | $6.523 | $5.782 | $11.27 |
| Year 3 | Stage 1 | $7.306 | $6.098 | $17.36 |
| Year 4 | Stage 1 | $8.182 | $6.430 | $23.79 |
| Year 5 | Stage 1 | $9.164 | $6.781 | $30.57 |
| Year 6 | Stage 2 | $9.806 | $6.831 | $37.41 |
| Year 7 | Stage 2 | $10.492 | $6.882 | $44.29 |
| Year 8 | Stage 2 | $11.227 | $6.933 | $51.22 |
| Year 9 | Stage 2 | $12.012 | $6.985 | $58.20 |
| Year 10 | Stage 2 | $12.853 | $7.037 | $65.24 |
| Terminal | — | TV=$490.89 | PV(TV)=$268.74 (80% of IV) | |
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|
| 4.2% | $304 | $360 | $450 | $615 | $1016 |
| 4.7% | $255 | $292 | $346 | $432 | $591 |
| 5.2% | $219 | $245 | $281 | $333 | $415 |
| 5.7% | $192 | $211 | $236 | $270 | $320 |
| 6.2% | $170 | $184 | $203 | $227 | $260 |
| 6.7% | $153 | $164 | $178 | $195 | $218 |
| 7.2% | $139 | $147 | $158 | $171 | $188 |
| 7.7% | $127 | $134 | $142 | $152 | $165 |
| 8.2% | $117 | $122 | $129 | $137 | $147 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | Ticker | P/E (fwd) | EV/EBITDA | FCF Yield | Div Yield | Div Growth Streak |
|---|
| Johnson & Johnson | JNJ | 20.6x | 31.3x | 4.2% | 2.16% | 64 years |
| AbbVie | ABBV | 15.5x | 14.0x | 5.2% | 3.2% | 10 years (+ Allergan) |
| Pfizer | PFE | 9.2x | 8.5x | 9.1% | 6.8% | 15 years (cut risk) |
| Merck | MRK | 10.8x | 12.0x | 6.5% | 3.5% | 14 years |
| Eli Lilly | LLY | 37.5x | 35.0x | 1.2% | 0.7% | 10 years |
| JNJ 5-yr Avg | — | 17.5x | 17.5x | 5.5% | 2.5% | — |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|
| Annual DPS | $5.200 |
| Current Yield | 2.16% |
| Consecutive Growth Years | 64 |
| 1-yr DPS CAGR | +4.8% |
| 3-yr DPS CAGR | +5.4% |
| 5-yr DPS CAGR | +5.5% |
| 10-yr DPS CAGR | +5.8% |
| Payout Ratio (DPS/EPS) | 47.0% |
| FCF Payout Ratio | 64.0% |
| Sustainability Verdict | ✅ Safe |
JNJ is the gold standard of dividend safety — 64 consecutive years of increases (Dividend King). Payout ratio of 47% (EPS) is conservative; FCF payout of 64% allows continued growth. FCF has remained stable at $17-20B despite Kenvue spin-off impact. Talc litigation reserve ($9.1B settlement pending) is largely provisioned. Dividend CAGR of ~5-6% per year is sustainable given strong pharma pipeline. Verdict: Safe — this is one of the safest dividends in the entire US equity market.
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|
| 2021 | $7.81 | — | — | — | Actual |
| 2022 | $6.73 | — | — | — | Actual |
| 2023 | $13.72 | — | — | — | Actual |
| 2024 | $5.79 | — | — | — | Actual |
| 2025 | $11.03 | — | — | — | Actual |
| 2026 | $11.20 | $11.65 | $12.26 | 28 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|
| 2021 | $78.7B | — | — | — | Actual |
| 2022 | $80.0B | — | — | — | Actual |
| 2023 | $85.2B | — | — | — | Actual |
| 2024 | $88.8B | — | — | — | Actual |
| 2025 | $94.2B | — | — | — | Actual |
| 2026 | $97.8B | $101.5B | $107.2B | 28 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $228.56 | Range $153–$265
| Analyst | Firm | Rating | PT | Upside |
|---|
| Terence Flynn | Morgan Stanley | Buy | $262 | +9.0% |
| Shagun Singh | RBC Capital | Buy | $255 | +6.1% |
| Chris Schott | JP Morgan | Hold | $250 | +4.0% |
| Vamil Divan | Guggenheim | Strong Buy | $240 | -0.2% |
| Ilya Zubkov | Freedom Capital Markets | Hold | $220 | -8.5% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|
| Q4 2025 | $11.03 vs $10.75 | +$0.28 ✅ | $94.2B vs $92.8B | +$1.4B ✅ | Raised |
| Q3 2025 | $2.42 vs $2.33 | +$0.09 ✅ | $22.8B vs $22.3B | +$0.5B ✅ | Maintained |
| Q2 2025 | $2.82 vs $2.66 | +$0.16 ✅ | $23.7B vs $23.2B | +$0.5B ✅ | Raised |
| Q1 2025 | $2.77 vs $2.59 | +$0.18 ✅ | $21.9B vs $21.5B | +$0.4B ✅ | Maintained |
(e) Confidence Band Commentary
JNJ is a consistent EPS beater — beat all 4 quarters in 2025 and guided up twice. The wide PT range ($153–$265) reflects talc litigation uncertainty (bear case $153) vs full pipeline realization (bull case $265). Narrow EPS range for 2026 ($11.20–$12.26) reflects high confidence in near-term earnings. The stock is trading above analyst consensus PT ($228.56) — a yellow flag on valuation. Recent upgrades from Morgan Stanley ($262 PT) have pushed stock above consensus.
💡 Investment Thesis
Bear case: JNJ is the most expensive of the large-cap pharma names at 31x EV/EBITDA
vs Merck at 12x and AbbVie at 14x. The premium is unjustified: Stelara faces $4-5B in biosimilar headwinds over
2025-2027, and the talc litigation settlement ($9.1B) is still uncertain. Meanwhile, Darzalex eventually faces
its own competition in the 2030s. Drug pricing reform under IRA takes a bigger bite each year.
At $240, investors are paying growth-stock multiples for a dividend company. Bear price target: $155-175.
Bull case: JNJ has earned its premium over 64 years of dividend growth.
Darzalex alone could be a $20B product by 2030. The bispecific antibody franchise (Tecvayli, Talvey)
represents a new growth vector in oncology. MedTech is accelerating post-Shockwave. JNJ's AAA credit rating
and $19B+ in annual FCF make this the ultimate defensive compounder. At 20x normalized EPS ($12), $240 is fair.
Our view — Hold: JNJ is a fine company but the stock price has outrun
analyst consensus. Our DDM base IV of $226 is 6% below current price. The 2.16% dividend yield is acceptable
but not attractive for a dedicated income strategy — better yield available elsewhere.
JNJ is a great core holding for quality-focused investors, but NOT an add at $240.
Joseph holds 1,772 shares at $144.84 avg cost — substantial unrealized gain. Hold and collect dividends;
do not add until the stock pulls back to $210-220 range.
Key triggers for re-evaluation: (1) Talc settlement approved at $9.1B → remove
litigation overhang, could re-rate to $255; (2) Stelara biosimilar worse than expected → reassess;
(3) IRA pricing reform expansion → negative for Darzalex long-term.
⚖️ DDM Verdict: Hold — Johnson & Johnson (JNJ)
Current price: $240.40 | Analyst Avg PT: $228.56
| Tier | Price | Action |
|---|
| Tier 1 — Starter | ≤$220 | Begin position |
| Tier 2 — Add | ≤$210 | Add on weakness |
| Tier 3 — Full | ≤$195 | Full allocation |
| Sell Alert | ≥$265 | Above fair value — consider trimming |
Hold — JNJ is a world-class compounder but current price ($240.40) represents a 6.4% premium to our DDM base IV ($226) and a 5.2% premium to analyst consensus PT ($228.56). Not the right entry point for new capital. For Joseph's existing position (1,772 shares at $144.84 avg cost, $169K unrealized gain), this is a comfortable hold — collect the dividend and let it ride. Add on pullback to $210-220 range (base IV to analyst PT zone). Becomes a Sell above $265 (bull IV) or if talc settlement exceeds $15B. 64-year dividend growth record makes this untouchable in a tax-advantaged account — but it's priced accordingly.
📂 Current Position Summary
| Metric | Value |
|---|
| Shares Held | 1,772.22 |
| Average Cost Basis | $144.84 |
| Current Market Value | $426,042 |
| Unrealized P&L | $+169,353 (+66.0%) |
| Annual Dividend Income | $9,216/yr |
| Yield on Cost | 3.59% |
| vs Target Position (~$200K) | $426,042 vs $200,000 (213% of target) |
Bore Family Office • Analysis generated by Lurch • Not investment advice.
