Johnson & Johnson
NYSE: JNJ
$253.03 ▲ +3.06  (+1.22%)
At close: Jul 17, 2026 · 3:59 PM UTC
Financial Ratios
Market Cap611.69 Bn
P/E29.07
P/S6.35
Div. Yield0.02
ROIC (Qtr)0.00
Total Debt (Qtr)54.99 Bn
Revenue Growth (1y) (Qtr)9.91
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About

Johnson & Johnson is a global healthcare company engaged in the research development manufacture and sale of a broad range of products related to human health and well being. The firm operates through subsidiaries that conduct business in virtually every country worldwide. Its core activities include discovering new therapies producing medical devices and delivering products to hospitals clinicians and patients. Johnson & Johnson was incorporated in the State of New Jersey…

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Sector: Healthcare Industry: Drug Manufacturers - General CIK: 0000200406

Investment Thesis

▲ Bull case
  • Johnson & Johnson's Innovative Medicine segment is demonstrating exceptional growth in multiple high-potential therapeutic areas, with Tremfya showing remarkable momentum in inflammatory bowel disease (IBD) following its fully subcutaneous approval for both ulcerative colitis and Crohn's disease, delivering 65.4% Q4 2025 operational sales growth worldwide and accelerating to over $5 billion in full-year sales, positioning it to exceed $10 billion in peak sales as IBD was 75% of Stelara's sales, indicating significant upside from capturing market share from the declining legacy drug. The oral psoriasis drug Icotyde (icotrokinra) received FDA approval for moderate-to-severe plaque psoriasis and achieved high rates of complete skin clearance in adolescents through Week 52 in the ICONIC-LEAD study, with nearly 60% achieving clear skin, and J&J sees peak annual sales exceeding $5 billion once approved for other autoimmune conditions like psoriatic arthritis, ulcerative colitis, and Crohn's disease, representing a transformational oral alternative to injectable IL-23 inhibitors that could capture substantial market share from Tremfya and competitors like Skyrizi due to its convenience and favorable safety profile. In oncology, Tecvayli (teclistamab) demonstrated clinically meaningful and statistically significant improvements in progression-free and overall survival in the MajesTEC-9 study, reducing the risk of disease progression or death by 71% and death by 40% in heavily pre-treated multiple myeloma patients refractory to anti-CD38 and lenalidomide, with all key secondary endpoints showing significant improvement including nearly two-thirds achieving complete response or better, supporting its potential as an early-line therapy and reinforcing J&J's leadership in bispecifics, while Darzalex Faspro-based quadruplet regimen approval for newly diagnosed transplant-ineligible multiple myeloma patients expands the foundational franchise's addressable population. The MedTech segment is benefiting from structural shifts toward higher-growth markets, with cardiovascular delivering 15.2% operational sales growth in 2025 driven by Abiomed and Shockwave, and the company's strategy to focus on cardiovascular, surgery, and vision is working, as evidenced by approximately half of the $34 billion MedTech business now participating in higher growth markets growing north of 5%, up from 20% in 2018, and expected to reach north of 70% following the orthopedics separation, which will catapult growth by reallocating capital to innovation-rich areas. Johnson & Johnson's financial strength provides resilience and flexibility for sustained investment, with $20 billion in cash and marketable securities, $19.7 billion of free cash flow generated in 2025, and guidance to elevate free cash flow to approximately $21 billion in 2026, enabling continued R&D and M&A investment, including the planned $1 billion investment in next-generation cell therapy manufacturing in Pennsylvania, while maintaining shareholder returns through a 3.1% dividend increase to $1.34 per share, marking 64 consecutive years of increases, all supporting the line of sight to double-digit revenue growth by the end of the decade despite the current $100 billion revenue base.
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▼ Bear case
  • Johnson & Johnson faces significant near-term headwinds from the erosion of Stelara due to biosimilar competition and Part D redesign, which created an approximate six twenty basis point headwind on full-year 2025 sales growth despite the company reporting 5.3% operational sales growth, and while management dismissed the impact as being in the rearview mirror, the Q1 2026 results show Stelara's negative impact persisted at approximately 920 basis points on Innovative Medicine operational sales growth, indicating the drag is more severe and longer-lasting than acknowledged, potentially undermining the growth trajectory as the company transitions patients to newer therapies like Tremfya and Icotyde, which may not fully offset the revenue decline quickly enough to sustain the guided 5.7%-6.7% operational sales growth for 2026. The company's reliance on multiple myeloma as a primary growth driver presents concentration risk, as while Darzalex grew 22% full-year 2025 and Carvicti achieved 63.2% Q4 growth, the oncology portfolio's success is heavily dependent on maintaining leadership in a single disease area, and any competitive setbacks in CAR T-cell therapies or bispecifics could disproportionately impact overall growth, especially given the high expectations for Tecvayli to expand into earlier lines of therapy, which remains unproven at scale despite promising early-line data. MedTech growth is being challenged by ongoing volume-based procurement (VBP) in China, which management acknowledged as partially offsetting growth in surgery and orthopedics, with Schmid noting VBP in China continues to impact results across the portfolio, and while the company plans to accelerate newly launched products, the persistent pricing pressure in a major global market could constrain MedTech's ability to achieve the guided 4.6%-5.6% operational sales growth range, particularly as tariffs on medtech imports are expected to increase significantly in 2026 to approximately $500 million, substantially above the 2025 amount, directly impacting cost of goods sold and margin progression. The orthopedics separation, while strategically positioned to unlock value, introduces execution risk, as Wolk noted the opportunity to eliminate stranded cost will likely need to be in place for 2027, meaning the near-term benefits of the spin-off may be delayed, and the process itself could distract management or create integration challenges during the transition period, potentially slowing the anticipated reallocation of capital to higher-growth areas like surgery robotics and vision. Finally, Johnson & Johnson's guidance for 2026 adjusted pretax operating margin improvement of at least 50 basis points may be overly optimistic given the headwinds from increased medtech tariffs, the cost of the fifty-third week of operations, and the impact of the voluntary U.S. government agreement to improve access to medicines and lower costs, which Wolk stated is factored into the margin guidance but could exert more pressure than anticipated, especially if the agreement leads to sustained pricing concessions that outweigh efficiency gains from infrastructure improvements and gross margin initiatives in manufacturing.
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Geographical Breakdown of Revenue (2025)

Peer Comparison

Companies in the Drug Manufacturers - General
S.No. Ticker Company Market CapP/EP/STotal Debt (Qtr)
1 LLY ELI LILLY & Co 1,066.16 Bn42.1814.7643.37 Bn
2 JNJ Johnson & Johnson 611.69 Bn29.076.3554.99 Bn
3 ABBV AbbVie Inc. 444.34 Bn122.047.0764.53 Bn
4 AZN Astrazeneca Plc 284.94 Bn23.782,793.52-24.45 Bn
5 MRK Merck & Co., Inc. 224.23 Bn25.003.4149.12 Bn
6 AMGN Amgen Inc 195.12 Bn25.025.2457.32 Bn
7 GILD Gilead Sciences, Inc. 156.45 Bn16.365.2622.17 Bn
8 PFE Pfizer Inc 136.01 Bn11,334.575.5664.46 Bn