Analyst Note| Damien Conover, CFA |
Johnson & Johnson’s announced acquisition of Abiomed for close to $17 billion enables the redeployment of capital into rapidly growing cardiovascular technology. While the valuation appears on the high side of the range of fair value estimates, we don’t expect any major changes to our fair value estimate for Johnson & Johnson. The deal should enable an acceleration of growth for the device business that has been posting more sluggish growth over the past several years. Additionally, we don’t see the deal as having a major impact on the firm’s wide moat, since the benefits of the acquisition look partially offset by the price paid.