Last Update 19 Dec 25

Fair value Increased 3.33%

JNJ Future Portfolio Separation And Litigation Resolution Will Shape Balanced Risk Reward Outlook

Analysts have raised their average price target on Johnson & Johnson by about $7 to roughly $209, reflecting slightly faster expected revenue growth, a modestly higher future earnings multiple, and confidence that portfolio reshaping and pipeline execution can offset near term margin pressure.

Analyst Commentary

Street research on Johnson & Johnson has turned incrementally more constructive, with multiple firms lifting price targets in response to stronger fundamentals and portfolio actions that are viewed as supportive of a faster growth profile.

Bullish Takeaways

Bullish analysts highlight that the planned separation of the orthopedics business should lift the company’s long term growth rate and margin profile, effectively warranting a higher earnings multiple on the remaining, faster growing portfolio.
Several research notes point to resilient performance in Innovative Medicine and MedTech, with upside from products such as Tremfya, Darzalex and newer pipeline assets seen as underappreciated in current valuation.
Positive commentary around talc litigation, which is increasingly viewed as manageable, is easing a key overhang and supporting the view that defensive attributes can coexist with an improving growth outlook.
Upgrades and price target increases into and after recent earnings emphasize that management is executing well against guidance and that consensus expectations for outer year growth, especially post Stelara loss of exclusivity, may prove too conservative.

Bearish Takeaways

Bearish analysts and those maintaining Neutral ratings see the stock’s rerating as largely reflecting improved fundamentals already, limiting near term upside until there is clearer evidence of sustained acceleration beyond the current guidance period.
Ongoing legal and headline risk around legacy consumer products, including Tylenol and talc, is still viewed as a potential drag on sentiment and could inject volatility into the valuation if new claims or filings emerge.
While the spin out of orthopedics is broadly viewed as strategic, some cautious voices flag execution risk around the separation and question whether near term dis synergies or transition costs could offset part of the anticipated margin gains.
Concerns remain that competitive dynamics in key therapeutic areas and the timing of new launches must be flawless to fully backfill Stelara’s patent expiry, leaving little room for missteps if the current premium relative to slower growing peers is to be sustained.

What's in the News

Los Angeles jury awards a $966M verdict against Johnson & Johnson in a talc related mesothelioma case, the largest talcum powder verdict to date (Law.com).
Johnson & Johnson faces its first U.K. lawsuits over alleged talc cancer risks, with a case filed on behalf of more than 3,000 people against J&J and Kenvue UK (Reuters).
Trump administration prepares a new probe into whether U.S. trading partners underpay for drugs, potentially affecting global pricing for major pharma companies including Johnson & Johnson (Financial Times).
Johnson & Johnson is in talks to acquire Protagonist Therapeutics in a multibillion dollar deal that would deepen their partnership on an oral immune disease therapy (Wall Street Journal).
The Trump administration outlines the next round of Medicare drug price negotiations, expanding a program that could pressure prices for branded drugs sold by companies such as Johnson & Johnson (Bloomberg).

Valuation Changes

Fair Value Estimate has risen slightly from $202.54 to $209.29, reflecting a modestly higher embedded expectation for long term performance.
Discount Rate is effectively unchanged, edging down fractionally from 6.96% to 6.96%, implying a stable risk assessment.
Revenue Growth has increased modestly, moving from 5.23% to approximately 5.32%, signaling slightly stronger top line assumptions.
Net Profit Margin has dipped marginally from about 23.43% to 23.37%, incorporating a small increase in expected cost or mix related pressure.
Future P/E has risen moderately from 23.8x to about 24.6x, indicating a higher valuation multiple on projected earnings.

Johnson & Johnson is poised for growth in immunology and oncology despite facing challenges from loss of drug exclusivity, leveraging next-gen therapies for strengthened revenue.
Strategic investments in U.S. operations, acquisitions, and MedTech expansion aim to boost future earnings and efficiency, with potential restructuring in surgery to aid profitability.
Loss of exclusivity for key products and tariffs could significantly threaten revenue and margins, while ongoing litigation poses financial risks.

Catalysts

About Johnson & Johnson

Engages in the research and development, manufacture, and sale of various products in the healthcare field worldwide.What are the underlying business or industry changes driving this perspective?

Johnson & Johnson anticipates accelerated growth in their portfolio and pipeline, particularly in the Innovative Medicine sector, despite the headwind from STELARA's loss of exclusivity. This is expected to bolster revenues through next-generation therapies and significant market share gains in oncology and immunology.
The company's substantial investment of over $55 billion into manufacturing, R&D, and technology in the U.S. over the next four years is projected to expand capacity for advanced medicines and devices, potentially increasing operational efficiency and future earnings.
Recent acquisitions, such as Intra-Cellular Therapies, are expected to contribute substantial revenue streams, with products like CAPLYTA potentially reaching over $5 billion in peak sales, positively affecting the company’s revenue and EPS in the future.
Ongoing expansion within MedTech, highlighted by strong performance from acquired cardiovascular units Abiomed and Shockwave, as well as developments in robotic surgery, are expected to drive revenue growth and enhance adjusted income margins over time.
The company plans significant restructuring in their surgery business within MedTech to streamline operations and improve efficiency, anticipated to have short-term revenue disruptions but expected to enhance long-term profitability and margin expansion.

Johnson & Johnson Earnings and Revenue Growth

Johnson & Johnson Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Johnson & Johnson's revenue will grow by 4.7% annually over the next 3 years.
Analysts assume that profit margins will shrink from 25.0% today to 22.0% in 3 years time.
Analysts expect earnings to reach $22.9 billion (and earnings per share of $10.07) by about September 2028, up from $22.7 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $19.1 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.8x on those 2028 earnings, up from 18.8x today. This future PE is greater than the current PE for the US Pharmaceuticals industry at 19.0x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Johnson & Johnson Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Loss of exclusivity for STELARA and the impact of biosimilar competition could significantly erode revenue from one of Johnson & Johnson's major products. This could affect overall revenue and net margins, especially in the innovative medicine segment.
Tariffs, particularly those related to exports to China, could increase costs and impact the net margins negatively, due to increased cost of goods sold from tariffs being relieved through the P&L in future periods.
The ongoing litigation related to talc, though controlled for now, poses a continual risk to financial stability and could impact net earnings and cash flow, particularly if adverse judgments or settlements occur.
The orthopedics segment faced headwinds, including competitive pressures and challenges in the spine and sports areas. Ongoing issues could impact revenue and earnings unless the planned innovations drive a turnaround.
Potential dilution from acquisitions such as Intra-Cellular Therapies and the impact of tariffs could affect operating margin improvement efforts, challenging overall earnings and net margins despite robust sales growth in some areas.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $177.468 for Johnson & Johnson based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $200.0, and the most bearish reporting a price target of just $155.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $104.1 billion, earnings will come to $22.9 billion, and it would be trading on a PE ratio of 22.8x, assuming you use a discount rate of 6.8%.
Given the current share price of $176.96, the analyst price target of $177.47 is 0.3% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Analyst Commentary Drives Higher Valuation Targets for Johnson & Johnson Amid Positive Company Developments