Analyst Verdict
Strong operational resilience and MedTech growth, but valuation is full and litigation risks persist.
Investment Summary
Johnson & Johnson remains a "Quality A+" fortress with a formidable balance sheet and recovering pipeline (Tremfya, MedTech acquisitions). However, trading at ~20x earnings, the price prices in perfection while ignoring the "black swan" risk of the ongoing talc litigation. We recommend holding for the dividend safety but waiting for a better entry point.
Recommendation
HOLD
Target Price
$195 - 215
Timeframe
6-12 Mo
Risk Level
High (Legal)
01 // Fundamental Analysis
Q3 2025 performance shows MedTech accelerating and Pharma stabilizing, driving revenue growth despite legal headwinds.
Revenue & Net Margin
Historical Performance + Estimates
Insight: Margins remain robust at >21% despite inflationary pressures, supported by operational efficiency and MedTech scale.
Relative Valuation (Forward P/E)
02 // Investment Thesis
MedTech Dominance
Acquisitions of V-Wave and Shockwave are paying off, driving MedTech segment growth to 6-7%, outpacing pure-play competitors.
Dividend King Fortress
With $14B+ in FCF YTD and 63 years of consecutive dividend increases, JNJ remains a safe haven for income investors despite volatility.
Litigation Overhang
The failure of the "Texas Two-Step" bankruptcy strategy leaves JNJ exposed to 67k+ lawsuits. Uncertainty caps any significant multiple expansion.
03 // Economic Moat
JNJ holds a Wide Moat rating due to its massive scale in pharmaceuticals and medical devices, switching costs in MedTech, and immense financial resources.
Competitive Attributes Radar
Score out of 10 vs. Industry Average
04 // Catalyst Watch
Q4 Earnings Release
Early 2026 (Short Term)
Validation of MedTech integration and 2026 guidance issuance.
Talc Litigation Settlement
Mid 2026 (Legal)
Any concrete movement towards a final settlement figure would remove the biggest overhang on the stock.
Stelara LOE Impact
2026-2027 (Long Term)
Monitoring the erosion curve of Stelara revenue as biosimilars enter the market.