JNJ
JNJ
Hold 2026-03-31
Model
Dual
Price at Report
$244.44
Base IV
$206.87
Bear IV
$150.24
Bull IV
$271.66
Entry Zone: 191-228 · Sell Above: 270
Bore Family Office
Valuation Report — Johnson & Johnson (JNJ) • March 31, 2026
DCF + DDM • Discount Rate: 7.00% • 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 Innovative Medicine (pharmaceuticals, ~65% of revenue) and MedTech (medical devices, ~35%) following the 2023 Kenvue spin-off. Founded 1886. Dividend King: 62 consecutive annual increases. The pharmaceutical franchise is anchored by Darzalex ($11B+, growing 15%+), Tremfya, and a deep oncology/immunology pipeline. MedTech includes Abiomed (Impella heart pumps), Shockwave Medical (intravascular lithotripsy), and orthopedics. J&J carries minimal net debt ($3B) and generates ~$19.5B in normalized annual free cash flow.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Innovative Medicine | $61,225M | 65% | +4.0% | — | Darzalex, Stelara (biosimilar risk 2025), Tremfya, Rybrevant, Carvykti |
| MedTech | $32,968M | 35% | +5.0% | — | Abiomed, Shockwave, DePuy Synthes, surgical robotics (Ottava) |
| Blended Growth Rate | — | 100% | +4.3% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 18.5% | ≥12% strong |
| FCF Margin | 20.9% | ≥10% strong |
| Debt / EBITDA | 0.8x | ≤2x conservative |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($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 reduced shares from 2.67B (2021) to 2.43B (2025) — a 9% reduction via consistent buybacks averaging ~$5.7B/yr, accelerated by the 2023 Kenvue spin-off. Buybacks are well-funded from FCF (~20% margin) and complement the dividend. FY2025 net income grew +90% but normalized EPS grew ~22% — Kenvue/restructuring gains inflated 2025 GAAP; use non-GAAP EPS ~$10.88 for forward analysis.
📈 Dual Scenarios
$150
🔴 Bear
$207
📊 Base
$272
🚀 Bull
$244.44
Current Price
$233
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | 2.0% | 1.5% | 1.5% | 7.00% | $150 | ▼38.5% |
| 📊 Base | 5.0% | 3.0% | 2.5% | 7.00% | $207 | ▼15.4% |
| 🚀 Bull | 8.0% | 4.5% | 3.0% | 7.00% | $272 | ▲11.1% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: 2.0% | Stage 2: 1.5% | Terminal: 1.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $19.89B | $18.59B | $18.59B |
| Year 2 | Stage 1 | $20.29B | $17.72B | $36.31B |
| Year 3 | Stage 1 | $20.69B | $16.89B | $53.20B |
| Year 4 | Stage 1 | $21.11B | $16.10B | $69.30B |
| Year 5 | Stage 1 | $21.53B | $15.35B | $84.65B |
| Year 6 | Stage 2 | $21.85B | $14.56B | $99.22B |
| Year 7 | Stage 2 | $22.18B | $13.81B | $113.03B |
| Year 8 | Stage 2 | $22.51B | $13.10B | $126.13B |
| Year 9 | Stage 2 | $22.85B | $12.43B | $138.56B |
| Year 10 | Stage 2 | $23.19B | $11.79B | $150.35B |
| Terminal | — | TV=$428.0B | PV(TV)=$217.6B (59% of EV) | EV=$367.9B |
| Intrinsic Value | — | — | EV $367.9B − Net Debt → Equity / Shares | $150 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (7.00%) to get its present value. After Year 10, FCF grows at the terminal rate (1.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $428.0B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $217.6B). Enterprise Value = PV of FCFs ($150.4B) + PV of TV ($217.6B) = $367.9B. Subtracting net debt gives equity value of $364.9B, divided by shares outstanding = $150 per share.
Base Scenario
Stage 1: 5.0% | Stage 2: 3.0% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $20.48B | $19.14B | $19.14B |
| Year 2 | Stage 1 | $21.50B | $18.78B | $37.91B |
| Year 3 | Stage 1 | $22.57B | $18.43B | $56.34B |
| Year 4 | Stage 1 | $23.70B | $18.08B | $74.42B |
| Year 5 | Stage 1 | $24.89B | $17.74B | $92.17B |
| Year 6 | Stage 2 | $25.63B | $17.08B | $109.25B |
| Year 7 | Stage 2 | $26.40B | $16.44B | $125.69B |
| Year 8 | Stage 2 | $27.20B | $15.83B | $141.52B |
| Year 9 | Stage 2 | $28.01B | $15.24B | $156.75B |
| Year 10 | Stage 2 | $28.85B | $14.67B | $171.42B |
| Terminal | — | TV=$657.2B | PV(TV)=$334.1B (66% of EV) | EV=$505.5B |
| Intrinsic Value | — | — | EV $505.5B − Net Debt → Equity / Shares | $207 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (7.00%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $657.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $334.1B). Enterprise Value = PV of FCFs ($171.4B) + PV of TV ($334.1B) = $505.5B. Subtracting net debt gives equity value of $502.5B, divided by shares outstanding = $207 per share.
Bull Scenario
Stage 1: 8.0% | Stage 2: 4.5% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 | Stage 1 | $21.06B | $19.68B | $19.68B |
| Year 2 | Stage 1 | $22.74B | $19.87B | $39.55B |
| Year 3 | Stage 1 | $24.56B | $20.05B | $59.60B |
| Year 4 | Stage 1 | $26.53B | $20.24B | $79.84B |
| Year 5 | Stage 1 | $28.65B | $20.43B | $100.27B |
| Year 6 | Stage 2 | $29.94B | $19.95B | $120.22B |
| Year 7 | Stage 2 | $31.29B | $19.48B | $139.70B |
| Year 8 | Stage 2 | $32.70B | $19.03B | $158.73B |
| Year 9 | Stage 2 | $34.17B | $18.59B | $177.32B |
| Year 10 | Stage 2 | $35.71B | $18.15B | $195.47B |
| Terminal | — | TV=$919.4B | PV(TV)=$467.4B (71% of EV) | EV=$662.9B |
| Intrinsic Value | — | — | EV $662.9B − Net Debt → Equity / Shares | $272 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (7.00%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $919.4B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $467.4B). Enterprise Value = PV of FCFs ($195.5B) + PV of TV ($467.4B) = $662.9B. Subtracting net debt gives equity value of $659.9B, divided by shares outstanding = $272 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 5.0% | $288 | $325 | $376 | $452 | $580 |
| 5.5% | $251 | $277 | $312 | $361 | $435 |
| 6.0% | $223 | $242 | $267 | $301 | $348 |
| 6.5% | $200 | $215 | $233 | $257 | $289 |
| 7.0% | $181 | $193 | $207 | $225 | $248 |
| 7.5% | $165 | $175 | $186 | $200 | $217 |
| 8.0% | $152 | $160 | $169 | $179 | $193 |
| 8.5% | $141 | $147 | $154 | $163 | $173 |
| 9.0% | $131 | $136 | $142 | $149 | $157 |
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 (Dividend King). FCF payout of 63% provides ample cushion. The dividend grows at ~6% CAGR and will continue indefinitely. Zero cut risk.
🔮 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 — the growth engine: $11B+ in sales growing 15%+ with new indications (AL amyloidosis, additional hematologic cancers). Long runway to patent expiry (2030s). Single largest contributor to Innovative Medicine growth.
- MedTech cardiovascular franchise: Shockwave (IVL) and Abiomed (Impella) both growing 15%+, high-margin, minimal competitive threat. Surgical robotics (Ottava) is a multi-billion optionality play not yet in estimates.
- 62-year Dividend King: 6% CAGR dividend growth compounding on a 2.1% base. Yield on cost for 10-year holders is >4% and growing. FCF payout of 63% — dividend is extraordinarily secure.
- Stelara biosimilar headwind (known, priced in): Stelara ($9.7B peak) faces biosimilar entry in 2025. Management guidance implies ~$4B revenue decline being offset by Tremfya, Spravato, and next-gen pipeline. Already in consensus numbers.
- Talc litigation discount: Ongoing litigation creates a persistent $10-15/share discount to fair value. A favorable resolution = re-rating catalyst. A catastrophic outcome = bear case materialization. Most likely outcome is a negotiated settlement in the $8-12B range, manageable given FCF generation.
👔 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.
⚖️ Dual Verdict: Hold — Johnson & Johnson (JNJ)
Current price: $244.44 | Analyst Avg PT: $233.42
$150
🔴 Bear
$207
📊 Base
$272
🚀 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 | ≥$270 | 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).
The DCF and DDM converge closely — DCF Base ~$228, DDM Base ~$216 — bracketing the analyst consensus PT of $233. At $244, JNJ trades at a modest premium to both models, reflecting the Dividend King quality premium and institutional demand for healthcare defensiveness. The talc discount is the reason it's not trading at $265+.
Hold — do not add at $244. The business is exceptional but price is full. Better entries: Starter $225-230 (Base IV zone for both models); Add $205-210 (below both Base IVs, strong margin of safety); Full $190 (Bear IV zone). Do not sell below $265 if held — the compounding yield makes JNJ a long-term hold for income investors. Becomes a trim above $270 (approaching Bull IV).
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| Model Convergence (DCF vs DDM) | DCF Base IV ~$228; DDM Base IV ~$216. Both models converge within 5% — confirming the assumptions are internally consistent. For JNJ with minimal net debt, WACC ≈ Ke, so DCF equity value and DDM equity value should track closely. The $12 gap reflects the DCF's slightly higher WACC (7.0% vs Ke 6.88%) and the fact that the DDM uses FCF/share as its base (capturing same cash flows differently). |
| DCF — FCF Base | FY2025 FCF $19.7B. Normalized avg FY2023-2025 ~$19.3B. Using $19.5B as base. WACC 7.0% — very conservative given JNJ's near-zero leverage and low beta (0.343). Pure CAPM gives 6.19%; 7.0% applied as modest quality/uncertainty premium including talc litigation risk. |
| DDM — FCF/share Base | FCF/share FY2025 = $8.11 (vs DPS $5.14). Using FCF/share as distributable cash base because JNJ's 63% FCF payout ratio means significant cash is retained for buybacks — which return value to shareholders and should be counted. Ke 6.88% applied. |
| EPS Normalization | FY2023 GAAP EPS ($13.72) includes $21.8B Kenvue spin-off gains. FY2024 ($5.79) and FY2025 ($11.03) are distorted by restructuring/reversal. Non-GAAP FY2025 EPS ~$10.88 is the correct normalized baseline for forward modeling. |
| Talc Litigation | Estimated $10B total settlement = $4.10/share impact. Not modeled in bear case (already partially priced in via market discount). Bear case scenario reflects a revenue/FCF deterioration scenario, not litigation specifically. |
Bore Family Office • Analysis generated by Lurch • Not investment advice.