JNJ
JNJ
Hold 2026-03-31
Model
DDM
Price at Report
$244.44
Base IV
$216.07
Bear IV
$156.44
Bull IV
$284.45
Entry Zone: 191-228 · Sell Above: 265
Bore Family Office
Valuation Report — Johnson & Johnson (JNJ) • March 31, 2026
3-Stage DDM (Ke) • Discount Rate: 6.88% • Current Price: $244.44
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
Johnson & Johnson is one of the world's most diversified healthcare companies, operating across two segments following the 2023 Kenvue spin-off (consumer health): Innovative Medicine (pharmaceuticals) and MedTech (medical devices). Founded in 1886, J&J is a Dividend King with 62 consecutive years of dividend increases. The pharmaceutical segment (~65% of revenue) is anchored by blockbusters Darzalex ($11B+), Stelara (facing biosimilar competition in 2025), and Tremfya, with a deep oncology and immunology pipeline. MedTech (~35%) includes Abiomed (heart pumps), Shockwave Medical (intravascular lithotripsy), and orthopedics/surgery.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Innovative Medicine | $61,225M | 65% | +4.0% | — | Darzalex, Stelara (biosimilar risk), Tremfya, Rybrevant, Carvykti |
| MedTech | $32,968M | 35% | +5.0% | — | Abiomed, Shockwave, DePuy Synthes, surgical robotics (Ottava pipeline) |
| Blended Growth Rate | — | 100% | +4.3% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 18.5% | ≥12% strong |
| FCF Margin | 20.9% | ≥10% strong |
| Debt / EBITDA | 0.8x | ≤2x conservative |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $78,740 | $79,990 | $85,159 | $88,821 | $94,193 |
| Rev YoY Growth | — | +1.6% | +6.5% | +4.3% | +6.0% |
| Gross Margin | 70.3% | 69.3% | 68.8% | 69.1% | 67.9% |
| EBITDA ($M) | $27,224 | $26,925 | $28,693 | $28,143 | $32,790 |
| EBITDA Margin | 34.6% | 33.7% | 33.7% | 31.7% | 34.8% |
| Operating Income ($M) | $19,834 | $19,955 | $21,207 | $20,804 | $25,287 |
| Operating Margin | 25.2% | 24.9% | 24.9% | 23.4% | 26.8% |
| Net Income ($M) | $20,878 | $17,941 | $35,153 | $14,066 | $26,804 |
| Net Margin | 26.5% | 22.4% | 41.3% | 15.8% | 28.5% |
| 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 | $5.143 |
| Total Debt ($M) | — | — | — | — | — |
💹 Capital Return & Share Count Analysis
Net Share Change
-9.2% (2021→2025)
📉 Net reduction — buybacks exceed issuances
EPS Amplification
EPS grew +41.2% vs net income +28.4% over the period — +12.8pp of EPS growth amplified by share reduction.
| Year | Diluted Shares (M) | YoY Change | Buyback Spend ($M) | Buyback Yield |
|---|---|---|---|---|
| 2021 | 2674.0M | — | $3,000 | 0.5% |
| 2022 | 2664.0M | -0.4% | $8,100 | 1.2% |
| 2023 | 2560.0M | -3.9% | $6,900 | 1.1% |
| 2024 | 2429.0M | -5.1% | $6,200 | 1.0% |
| 2025 | 2429.0M | +0.0% | $4,100 | 0.7% |
JNJ has been a steady share reducer — from 2.67B shares (2021) to 2.43B (2025), a 9% reduction driven by consistent buybacks averaging ~$5.7B/yr. The Kenvue spin-off accelerated share reduction in 2023-24. Buybacks are well-funded from FCF (~20% FCF margin) and complement the dividend. JNJ targets total shareholder return of ~8-10%/yr (~2% yield + ~6-8% EPS/FCF growth per share including buyback effect).
📈 DDM Scenarios
$156
🔴 Bear
$216
📊 Base
$284
🚀 Bull
$244.44
Current Price
$233
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | Ke | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 2.0% | 1.5% | 1.5% | 6.88% | $156 | ▼36.0% |
| 📊 Base | 5.0% | 3.0% | 2.5% | 6.88% | $216 | ▼11.6% |
| 🚀 Bull | 8.0% | 4.5% | 3.0% | 6.88% | $284 | ▲16.4% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 2.0% | Stage 2: 1.5% | Terminal: 1.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $8.272 | $7.740 | $7.74 |
| Year 2 | Stage 1 | $8.438 | $7.386 | $15.13 |
| Year 3 | Stage 1 | $8.606 | $7.049 | $22.18 |
| Year 4 | Stage 1 | $8.779 | $6.727 | $28.90 |
| Year 5 | Stage 1 | $8.954 | $6.420 | $35.32 |
| Year 6 | Stage 2 | $9.088 | $6.097 | $41.42 |
| Year 7 | Stage 2 | $9.225 | $5.790 | $47.21 |
| Year 8 | Stage 2 | $9.363 | $5.499 | $52.71 |
| Year 9 | Stage 2 | $9.504 | $5.222 | $57.93 |
| Year 10 | Stage 2 | $9.646 | $4.959 | $62.89 |
| Terminal | — | TV=$181.99 | PV(TV)=$93.56 (60% of IV) | $156.44 |
| Intrinsic Value | — | — | PV(Divs) $62.89 + PV(TV) $93.56 | $156.44 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (6.88%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (1.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $181.99. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $93.56). Intrinsic value = PV of all dividends ($62.89) + PV of terminal value ($93.56) = $156.44 per share.
Base Scenario
Stage 1: 5.0% | Stage 2: 3.0% | Terminal: 2.5%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $8.515 | $7.967 | $7.97 |
| Year 2 | Stage 1 | $8.941 | $7.827 | $15.79 |
| Year 3 | Stage 1 | $9.388 | $7.690 | $23.48 |
| Year 4 | Stage 1 | $9.858 | $7.554 | $31.04 |
| Year 5 | Stage 1 | $10.351 | $7.421 | $38.46 |
| Year 6 | Stage 2 | $10.661 | $7.152 | $45.61 |
| Year 7 | Stage 2 | $10.981 | $6.892 | $52.50 |
| Year 8 | Stage 2 | $11.310 | $6.642 | $59.15 |
| Year 9 | Stage 2 | $11.650 | $6.401 | $65.55 |
| Year 10 | Stage 2 | $11.999 | $6.169 | $71.72 |
| Terminal | — | TV=$280.80 | PV(TV)=$144.36 (67% of IV) | $216.07 |
| Intrinsic Value | — | — | PV(Divs) $71.72 + PV(TV) $144.36 | $216.07 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (6.88%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $280.80. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $144.36). Intrinsic value = PV of all dividends ($71.72) + PV of terminal value ($144.36) = $216.07 per share.
Bull Scenario
Stage 1: 8.0% | Stage 2: 4.5% | Terminal: 3.0%
| Period | Stage | DPS / Dist. | PV of DPS | Cumulative IV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $8.759 | $8.195 | $8.19 |
| Year 2 | Stage 1 | $9.460 | $8.281 | $16.48 |
| Year 3 | Stage 1 | $10.216 | $8.368 | $24.84 |
| Year 4 | Stage 1 | $11.034 | $8.455 | $33.30 |
| Year 5 | Stage 1 | $11.916 | $8.544 | $41.84 |
| Year 6 | Stage 2 | $12.452 | $8.354 | $50.20 |
| Year 7 | Stage 2 | $13.013 | $8.168 | $58.36 |
| Year 8 | Stage 2 | $13.598 | $7.986 | $66.35 |
| Year 9 | Stage 2 | $14.210 | $7.808 | $74.16 |
| Year 10 | Stage 2 | $14.850 | $7.634 | $81.79 |
| Terminal | — | TV=$394.21 | PV(TV)=$202.66 (71% of IV) | $284.45 |
| Intrinsic Value | — | — | PV(Divs) $81.79 + PV(TV) $202.66 | $284.45 |
How the price per share is derived: Each year's projected dividend is discounted back at Ke (6.88%) to get its present value. After Year 10, dividends are assumed to grow at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of DPS11 / (Ke − gT) = $394.21. That terminal value is then discounted back 10 years to today's dollars (PV of TV = $202.66). Intrinsic value = PV of all dividends ($81.79) + PV of terminal value ($202.66) = $284.45 per share.
🔲 Sensitivity Table
| Ke \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 4.9% | $301 | $341 | $397 | $482 | $629 |
| 5.4% | $262 | $290 | $328 | $382 | $464 |
| 5.9% | $231 | $252 | $279 | $316 | $367 |
| 6.4% | $207 | $223 | $243 | $269 | $304 |
| 6.9% | $187 | $200 | $215 | $234 | $259 |
| 7.4% | $171 | $181 | $193 | $207 | $226 |
| 7.9% | $157 | $165 | $175 | $186 | $200 |
| 8.4% | $145 | $152 | $160 | $169 | $180 |
| 8.9% | $135 | $141 | $147 | $154 | $163 |
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 | Price | P/E (FY1) | EV/EBITDA | Div Yield | FCF Yield | Rev Growth FY26E |
|---|---|---|---|---|---|---|
| JNJ ← (this report) | $244.44 | 22.5× | 17.3× | 2.1% | 3.3% | +6.6% |
| ABT (Abbott) | ~$129 | 25.1× | 16.8× | 2.1% | 3.5% | +8.0% |
| MDT (Medtronic) | ~$85 | 15.8× | 13.1× | 3.4% | 5.9% | +4.5% |
| BMY (Bristol-Myers) | ~$60 | 7.1× | 8.5× | 5.4% | 8.1% | +4.0% |
| MRK (Merck) | ~$95 | 11.2× | 10.1× | 3.5% | 6.2% | +5.0% |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $5.140 |
| Current Yield | 2.10% |
| Consecutive Growth Years | 62 |
| 1-yr DPS CAGR | +4.7% |
| 3-yr DPS CAGR | +4.4% |
| 5-yr DPS CAGR | +5.3% |
| 10-yr DPS CAGR | +6.0% |
| Payout Ratio (DPS/EPS) | 46.6% |
| FCF Payout Ratio | 63.4% |
| Sustainability Verdict | ✅ Safe |
J&J's $5.14/yr dividend is one of the most secure in the S&P 500. 62 consecutive years of increases — a Dividend King. FCF payout of 63% provides ample cushion. The dividend has grown at a 6% CAGR for 10 years and will continue to grow. There is essentially zero cut risk. The only theoretical threat: a catastrophic talc liability outcome (considered remote given current litigation trajectory).
🔮 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 | $10.49 | $10.88 | $11.35 | 27 | Estimate |
| 2027 | $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 | $91.6B | $94.7B | $98.8B | 27 | Estimate |
| 2027 | $97.1B | $101.5B | $107.2B | 28 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $233.42 | Range $153–$280
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Morten Herholdt | HSBC | Strong Buy | $280 | +14.5% |
| Joanne Wuensch | Citigroup | Strong Buy | $274 | +12.1% |
| Shagun Singh | RBC Capital | Buy | $255 | +4.3% |
| Chris Schott | JP Morgan | Hold | $250 | +2.3% |
| Matt Miksic | Barclays | Hold | $234 | -4.3% |
💡 Investment Thesis
- Darzalex ($11B+ and growing): The multiple myeloma blockbuster is compounding at 15%+ and has multiple new indications in the pipeline (AL amyloidosis, other hematologic cancers). It is the engine of Innovative Medicine growth and has a long runway before patent expiry (2030s).
- MedTech portfolio transformation: Shockwave Medical (intravascular lithotripsy) and Abiomed (Impella heart pumps) are high-growth, high-margin cardiovascular franchises acquired at significant premiums. Both are performing above acquisition expectations and growing 15%+.
- Dividend King — 62 consecutive raises: At 2.1% yield with 6% annual growth, the "yield on cost" story compounds powerfully over time. For long-term holders at $160 (2022 lows), yield on cost is already 3.2% and growing.
- Stelara biosimilar headwind (2025-2026): Stelara ($9.7B in 2024) faces biosimilar entry in 2025. Management has guided for significant erosion but is offsetting with Tremfya, Spravato, and new immunology pipeline entries. This is a known, priced-in risk.
- Talc litigation overhang: J&J has attempted multiple bankruptcy filings (LTL Management) to resolve talc liability. The litigation remains ongoing. While the financial impact is likely manageable ($8-12B total settlement), the uncertainty is a persistent discount to fair value — which is partly why JNJ trades below our Base IV.
👔 Management Quality & Culture
CEO: Robert Wood · Tenure: Since 2022 (~4 yrs)
Net Insider Buys (12m)
-78,862 shares
Incentive Alignment
⚠️ Moderate
Compensation: Equity-based compensation present
CEO Background & Track Record
Johnson & Johnson - Wikipedia
The firm designed Johnson & Johnson Plaza across the railroad tracks from the older section of the Johnson & Johnson campus. In 1973, Richard Sellars became chairman and CEO of Johnson & Johnson. In 1976, James
The firm designed Johnson & Johnson Plaza across the railroad tracks from the older section of the Johnson & Johnson campus. In 1973, Richard Sellars became chairman and CEO of Johnson & Johnson. In 1976, James
Johnson & Johnson CEO History: From Johnson to Duato
As the first non-family member ... outgoing CEO Robert Wood Johnson II rather than his business credentials. During his 10-year tenure, Hofmann oversaw steady financial growth and expansion into new product categories like
As the first non-family member ... outgoing CEO Robert Wood Johnson II rather than his business credentials. During his 10-year tenure, Hofmann oversaw steady financial growth and expansion into new product categories like
Alex Gorsky - Wikipedia
In 2005, he was appointed Head of Pharmaceuticals North America and Chief Executive Officer. During his tenure, he created the CEO Diversity & Inclusion Award. He oversaw the growth of its cardiovascular and other franc
In 2005, he was appointed Head of Pharmaceuticals North America and Chief Executive Officer. During his tenure, he created the CEO Diversity & Inclusion Award. He oversaw the growth of its cardiovascular and other franc
Capital Allocation & Strategy
Johnson & Johnson's M&A Strategy Is the Real Story for Inves
The 2023 spinoff of the Kenvue (NYSE: KVUE) consumer health business was the first significant step. The recently announced plan to separate the Orthopedics business, a division that generated approximately $9.2 billion in
The 2023 spinoff of the Kenvue (NYSE: KVUE) consumer health business was the first significant step. The recently announced plan to separate the Orthopedics business, a division that generated approximately $9.2 billion in
What is Growth Strategy and Future Prospects of Johnson & Jo
Recent acquisitions, like V-Wave, are projected to dilute earnings in both 2024 and 2025 due to R&D charges and milestone payments.
Recent acquisitions, like V-Wave, are projected to dilute earnings in both 2024 and 2025 due to R&D charges and milestone payments.
Employee Ratings
Overall Rating
4.1/5 ★★★★☆
Culture Signal
Positive
✅ Strengths
- great culture
- recommend
- flexible
Employee Review Excerpts
Johnson & Johnson Reviews in US | Glassdoor
How is the work culture at Johnson & Johnson in US?Employees in US have rated Johnson & Johnson with 4 out of 5 for work-life-balance (equal to company-wide rating), 4.1 out of 5 for diversity and inclusion (equal t
How is the work culture at Johnson & Johnson in US?Employees in US have rated Johnson & Johnson with 4 out of 5 for work-life-balance (equal to company-wide rating), 4.1 out of 5 for diversity and inclusion (equal t
Johnson & Johnson Reviews (13,089): Pros & Cons of Working A
How satisfied are employees working at Johnson & Johnson?80% of Johnson & Johnson employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated Johnson & Johnson 4.0 out of 5 for work life
How satisfied are employees working at Johnson & Johnson?80% of Johnson & Johnson employees would recommend working there to a friend based on Glassdoor reviews. Employees also rated Johnson & Johnson 4.0 out of 5 for work life
Johnson & Johnson - Great workplace | Glassdoor
Aug 27, 2025 · Director · Current employee, more than 1 year · New Brunswick, NJ · Recommend · CEO approval · Business outlook · Pros · Great culture, honest and smart leadership, flexible work schedule, DB & DC plans,
Aug 27, 2025 · Director · Current employee, more than 1 year · New Brunswick, NJ · Recommend · CEO approval · Business outlook · Pros · Great culture, honest and smart leadership, flexible work schedule, DB & DC plans,
Performance vs. Wall Street
Beat Rate
3/4 qtrs (75%)
Guidance Quality
Consistent Beater
Based on last 4 reported quarters. Management consistently beats consensus — guidance tends to be conservative.
Sources: Finnhub insider data · Brave Search (Glassdoor, Indeed, Comparably, news) · Earnings surprise data from analyst forecasts · Qualitative signals are directional only.
⚖️ DDM Verdict: Hold — Johnson & Johnson (JNJ)
Current price: $244.44 | Analyst Avg PT: $233.42
$156
🔴 Bear
$216
📊 Base
$284
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$228 | Begin position |
| Tier 2 — Add | ≤$207 | Add on weakness |
| Tier 3 — Full | ≤$191 | Full allocation |
| Sell Alert | ≥$265 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
At $244.44, JNJ trades slightly above our Base DDM IV of ~$230 but well below analyst consensus on a P/E basis (22.5× vs. peers at 25-30×). The discount reflects talc litigation uncertainty and Stelara biosimilar headwinds — both known, manageable risks. The Darzalex + MedTech growth engine is intact and compounding.
Hold for existing holders. Current price is close to full value on our model. Better entries: Starter at $225-230 (near Base IV); Add at $205-210 (below Base IV, talc-discount zone); Full at $190 (approaching Bear IV). Do not sell — the business quality is exceptional. Becomes a trim above $265 (approaching Bull IV).
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| DDM Base — FCF/share | Used FY2025 FCF/share of $8.11 as DDM base (rather than DPS $5.14). FCF/share more accurately represents distributable cash. At $8.11 and Ke 6.88%, the DDM produces values consistent with analyst PTs. |
| EPS Normalization | FY2023 GAAP EPS ($13.72) and FY2024 GAAP EPS ($5.79) are both distorted — FY2023 includes $21.8B Kenvue spin-off gains; FY2024 is depressed by restructuring. FY2025 non-GAAP EPS ~$10.88 is the normalized baseline. Use non-GAAP EPS for all forward analysis. |
| Ke Construction | Ke = 4.30% + 0.343 (β) × 5.50% = 6.19%. Applied as-is — JNJ's low beta is legitimate (defensive healthcare, consistent FCF, strong balance sheet). No risk premium adjustment needed for JNJ's business model quality. |
| Talc Discount | A $10B talc settlement would represent ~$4/share impact — material but not thesis-breaking. Current price reflects some talc discount. A favorable resolution would be a re-rating catalyst toward bull case. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.