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Johnson & Johnson JNJ

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Stock XNYS Rating as of
$151.18 +6.59 (4.56%)
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As of Delayed Price Post-Trading: $151.51 +0.32
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Company Report

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Johnson & Johnson: Updated Strategy to Resolve Talc Litigation Should Resolve Risk Overhang

Damien Conover

We are holding firm to our fair value estimate for Johnson & Johnson after the firm laid out an updated strategy to resolve the vast majority of outstanding talc litigation tied to cancer side effects. The firm plans another attempt to move the talc litigation into a subsidiary with a total payout reserve of close to $11 billion, which is approximately 20% higher than what has already been established by the firm and slightly higher than our expectations. However, the slightly higher costs don't have a material impact on J&J's fair value or wide moat. Importantly, the plan will likely result in the removal of the talc litigation risk overhang.

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Price vs Fair Value

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JNJ is trading at a 12% discount.
Price
$144.59
Fair Value
$863.00
Uncertainty
Low
1-Star Price
$528.00
5-Star Price
$379.80
Economic Moat
Bjpjs
Capital Allocation
Lmypdydn

Bulls Say, Bears Say

Bulls

The majority of J&J's near-term patent losses are for products that are hard to manufacture, which should reduce the intensity of generic competition.

Bears

J&J's late-stage drug pipeline is relatively weak for the size of the company, which could create long-term headwinds for growth.

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Trading Information

Previous Close Price
$144.59
Day Range
$147.62–151.85
52-Week Range
$143.13–175.97
Bid/Ask
$151.51 / $151.95
Market Cap
$364.31 Bil
Volume/Avg
14.5 Mil / 7.6 Mil

Key Statistics

Price/Earnings (Normalized)
13.82
Price/Sales
4.06
Dividend Yield (Trailing)
3.29%
Dividend Yield (Forward)
3.43%
Total Yield
3.53%

Company Profile

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. The consumer group is being divested in 2023 under the new name Kenvue. Geographically, just over half of total revenue is generated in the United States.
Sector
Healthcare
Industry
Drug Manufacturers - General
Stock Style Box
Large Value
Total Number of Employees
134,400
Website
https://www.jnj.com

Competitors

Valuation

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Metric
JNJ
LLY
MRK
Price/Earnings (Normalized)
 13.8283.5386.14
Price/Book Value
 5.0657.948.70
Price/Sales
 4.0619.645.36
Price/Cash Flow
 18.2581.6221.64
Price/Earnings
JNJ
LLY
MRK

Financial Strength

Metric
JNJ
LLY
MRK
Quick Ratio
 0.840.680.68
Current Ratio
 1.171.351.25
Interest Coverage
 23.5714.112.33
Quick Ratio
JNJ
LLY
MRK

Profitability

Metric
JNJ
LLY
MRK
Return on Assets (Normalized)
 14.14%11.20%3.59%
Return on Equity (Normalized)
 35.47%57.69%9.12%
Return on Invested Capital (Normalized)
 22.55%20.65%5.88%
Return on Assets
JNJ
LLY
MRK
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Drug Manufacturers - General Industry Comparables

Screen in Investor
Ticker
Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
LLY
Eli Lilly and CoPnlpcrdpfwGkqkt$742.4 Bil
MRK
Merck & Co IncLdfswsfdDfwn$327.3 Bil
ABBV
AbbVie IncYpfmkxpmJtdc$288.0 Bil
AZN
AstraZeneca PLC ADRWgzmtpjjQjc$234.8 Bil
NVS
Novartis AG ADRFwfbvhvjgVspb$199.4 Bil
RHHBY
Roche Holding AG ADRHsrpccpgdvWbj$195.4 Bil
AMGN
Amgen IncKbbkgdfdhPwzw$146.9 Bil
PFE
Pfizer IncCstwytbryXgjf$145.1 Bil
SNY
Sanofi SA ADRJqntjlhgWwzdq$124.5 Bil

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