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Johnson & Johnson JNJ

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

J&J's Solid Q1 Buoyed by Returning Elective Procedures and Solid Cancer Drug Sales

Damien Conover, CFA Sector Director

Analyst Note

| Damien Conover, CFA |

Johnson & Johnson reported solid first-quarter results that were slightly ahead of our and Visible Alpha consensus expectations, but we don’t expect any major changes to our fair value estimate based on the minor outperformance. Importantly, the firm’s more elective products in orthopedics continue to return to normal after COVID-19 concerns weighed heavily on joint-replacement procedures in 2020. Even though knee procedures still appear under pressure, this area is viewed as one of the most elective surgeries and will likely trend toward normal later this year. We believe the high switching costs (doctors investing time to learn a competitor's product) will likely support consistent orthopedic market share as sales rebound, which also supports the firm’s wide moat along with the strong intangible assets in the drug and consumer groups.

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Company Profile

Business Description

Johnson & Johnson is the world's largest and most diverse healthcare firm. Three divisions make up the firm: pharmaceutical, medical devices and diagnostics, and consumer. The drug and device groups represent close to 80% of sales and drive the majority of cash flows for the firm. The drug division focuses on the following therapeutic areas: immunology, oncology, neurology, pulmonary, cardiology, and metabolic diseases. The device segment focuses on orthopedics, surgery tools, vision care, and a few smaller areas. The last segment of consumer focuses on baby care, beauty, oral care, over-the-counter drugs, and women’s health. Geographically, just over half of total revenue is generated in the United States.

Contact
One Johnson and Johnson Plaza
New Brunswick, NJ, 08933
T +1 732 524-0400
Sector Healthcare
Industry Drug Manufacturers - General
Most Recent Earnings Mar 31, 2021
Fiscal Year End Jan 3, 2022
Stock Type Slow Growth
Employees 136,400

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