Johnson & Johnson (JNJ) | Investment Case

1. Company Snapshot

1.a. Company Description

Johnson & Johnson, together with its subsidiaries, researches and develops, manufactures, and sells various products in the healthcare field worldwide.The company's Consumer Health segment offers baby care products under the JOHNSON'S and AVEENO Baby brands; oral care products under the LISTERINE brand; skin health/beauty products under the AVEENO, CLEAN & CLEAR, DR.CI:LABO, NEUTROGENA, and OGX brands; TYLENOL acetaminophen products; SUDAFED cold, flu, and allergy products; BENADRYL and ZYRTEC allergy products; MOTRIN IB ibuprofen products; NICORETTE smoking cessation products; and PEPCID acid reflux products.

It also offers STAYFREE and CAREFREE sanitary pads; o.b. tampons; adhesive bandages under the BAND-AID brand; and first aid products under the NEOSPORIN brand.It serves general public, retail outlets, and distributors.The company's Pharmaceutical segment offers products for rheumatoid arthritis, psoriatic arthritis, inflammatory bowel disease, and psoriasis; HIV/AIDS and COVID-19 infectious diseases; mood disorders, neurodegenerative disorders, and schizophrenia; prostate cancer, hematologic malignancies, lung cancer, and bladder cancer; thrombosis, diabetes and macular degeneration; and pulmonary arterial hypertension.

This segment serves retailers, wholesalers, distributors, hospitals, and healthcare professionals directly for prescription use.Its MedTech segment provides electrophysiology products to treat cardiovascular diseases; neurovascular care products to treat hemorrhagic and ischemic stroke; orthopaedics products in support of hips, knees, trauma, spine, sports, and other; advanced and general surgery solutions that focus on breast aesthetics, ear, nose, and throat procedures; and disposable contact lenses and ophthalmic products related to cataract and laser refractive surgery under the ACUVUE brand.This segment serves wholesalers, hospitals, and retailers.

The company was founded in 1886 and is based in New Brunswick, New Jersey.

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1.b. Last Insights on JNJ

Johnson & Johnson's recent performance was driven by strong pharma and MedTech momentum, offset by Stelara biosimilar pressure and China-related headwinds. The company's Q4 earnings beat, driven by oncology drug growth led by Darzalex, offset biosimilar pressure on Stelara. Analysts expect robust performance, with Bank of America raising its price target to $220. The company's diversified pharma and MedTech strength compares favorably to AstraZeneca's oncology-led growth. J&J's recent acquisition of a biotech with an innovative cancer treatment also contributed to its positive outlook.

1.c. Company Highlights

Last Price	233.46
Change Percentage	1.17%
Open	231.5
Previous Close	230.75
Market Cap ( Millions)	562474
Volume	1988668
Year High	235.24
Year Low	141.5
M A 50	210.67
M A 200	180.09

FCF Yield	3.39%
Dividend Yield	2.20%
ROE	34.88%
Debt / Equity	57.77%
Net Debt / EBIDTA	72.40%
Price To Book	7.15
Price Earnings Ratio	21.15
Price To FCF	29.5
Price To sales	5.97
EV / EBITDA	15.5

2. Johnson & Johnson's Strong 2025 Performance Sets Stage for Continued Growth

Johnson & Johnson reported worldwide sales of $24.6 billion for Q4 2025, up 7.1% year-over-year, and $94.2 billion for the full year, up 5.3%. Net earnings for Q4 were $5.1 billion, with diluted earnings per share of $2.1, while adjusted diluted earnings per share was $2.46, representing a 21.5% increase compared to 2024. For the full year, net earnings were $26.8 billion, and diluted earnings per share was $11.3. The company's Pharmaceutical business exceeded $60 billion in sales for the first time, driven by strong performance in oncology and immunology. The adjusted income before tax by segment improved in Innovative Medicine and MedTech, with margins of 36.3% and 17.4%, respectively.

Publication Date: Jan -22

                                    📋 Highlights
                                    Pharmaceutical Sales Milestone::
                                                Achieved $60+ billion in sales for the first time, with 13 brands growing double digits, including DARZALEX (+22%) and Carvictee ($555M, +63.2%).
R&D & M&A Investment::
                                                Spent over $32 billion in 2025, acquiring Intracellular Therapies and Halda Therapeutics to bolster innovation pipeline.
Adjusted EPS Growth::
                                                Adjusted diluted EPS rose 21.5% to $2.46 in Q4 2025 ($11.3 for the year), with 2026 guidance projecting growth to $11.28–$11.48.
MedTech Growth::
                                                Delivered 5.8% operational sales growth, driven by cardiovascular (+15.2%), surgery (double-digit), and vision (mid- to high-single-digit).
Tax Benefit Impact::
                                                GAAP effective tax rate was a 3% benefit in 2025 versus an 11.7% cost in 2024, largely due to a non-recurring tax advantage.

                                

Operational Highlights

The company's operational sales growth was driven by commercial execution and innovation, with 13 pharmaceutical brands growing double digits. Oncology delivered 21% operational sales growth, with DARZALEX growing 22% and Carvictee achieving sales of $555 million with growth of 63.2%. Immunology saw Tremfya deliver remarkable growth of 65.4%, while STELARA declined 48.6% due to biosimilar competition. MedTech delivered 5.8% growth, driven by strong performance in cardiovascular, surgery, and vision.

Growth Prospects

Johnson & Johnson expects growth in 2026 to be faster than in 2025, with a line of sight to double-digit growth by the end of the decade, driven by 28 platform-sold products generating at least $1 billion of revenue annually. The company anticipates operational sales growth of 5.7% to 6.7% in 2026, with a midpoint of $100 billion, and adjusted operational earnings per share growth of 5.5% at the midpoint, in the range of $11.28 to $11.48. The company's long-term growth prospects are driven by its portfolio and pipeline in six core areas: oncology, immunology, and neuroscience in innovative medicine, and cardiovascular, surgery, and vision in medtech.

Valuation

With a P/E Ratio of 21.08 and an EV/EBITDA of 13.98, the market appears to be pricing in moderate growth expectations. The company's ROE of 32.69% and ROIC of 12.93% indicate strong profitability. The Dividend Yield of 2.36% and Free Cash Flow Yield of 3.63% suggest a reasonable return for shareholders. As the company continues to invest in R&D and make strategic acquisitions, its growth prospects and strong financial performance are likely to drive shareholder value.

Key Drivers

The company's growth drivers include Ribrovant in head and neck cancer and colorectal cancer, AMAVE in Sjogren's disease and lupus, atopic dermatitis with recent acquisitions, B cell malignancies with Bi CAR, and Milvexian in partnership with Bristol Myers Squibb for atrial fibrillation and secondary stroke prevention. With a robust pipeline and a commitment to investing in R&D, Johnson & Johnson is well-positioned for continued growth and success.

3. NewsRoom

What's Behind The 50% Surge In JNJ Stock?