Johnson & Johnson (JNJ): Valuation in Focus After TREMFYA’s Pediatric FDA Approval Expands Growth Potential

Johnson & Johnson’s (JNJ) stock is drawing attention as the company announced the FDA approval of TREMFYA for children six and older with moderate to severe plaque psoriasis or active psoriatic arthritis. This milestone expands TREMFYA’s reach and places Johnson & Johnson at the forefront of pediatric autoimmune treatments, supported by encouraging late-stage clinical trial data.

See our latest analysis for Johnson & Johnson.

The FDA’s latest green light is just one in a series of high-impact updates from Johnson & Johnson, including new clinical data presentations and expansions to their drug portfolio. The momentum is building: Johnson & Johnson’s year-to-date share price return signals solid gains, and over five years its total shareholder return reflects steady long-term compounding despite sector headwinds and litigation overhangs.

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With the stock rallying on promising drug news and long-term returns, investors must now weigh whether Johnson & Johnson remains undervalued or if the market has already priced in its future growth. Does this create a true buying opportunity?

Most Popular Narrative: Fairly Valued

Compared to the last close price of $185.98, the consensus narrative sees Johnson & Johnson’s fair value as almost identical to where shares trade today. With such a narrow gap between fair value and the market price, this sets up a debate over how much future growth is truly already reflected in the share price.

The consensus analyst price target of $177.468 for Johnson & Johnson is 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.

Read the complete narrative.

Ever wonder what bold growth assumptions underpin this near-perfect match between market and analyst views? The narrative teases major margin shifts and a future profit multiple higher than many sector peers. Which forward-looking projections truly justify this verdict? See the full breakdown to see the precise financial expectations that led analysts to call J&J fairly valued.

Result: Fair Value of $179.64 (ABOUT RIGHT)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing litigation and the looming impact of tariffs remain serious wildcards. These factors could rapidly derail even the most confident growth forecasts.

Find out about the key risks to this Johnson & Johnson narrative.

Another View: Discounted Cash Flow Suggests Opportunity

Looking from a different angle, the SWS DCF model values Johnson & Johnson shares at $442.56. This puts the current trading price at a steep 58% discount and suggests the stock may be significantly undervalued. Why is there such a big gap between two respected valuation approaches?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Johnson & Johnson for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Johnson & Johnson Narrative

If you think the story looks different through your own lens, it takes just minutes to dive into the numbers and craft a unique perspective, so why not Do it your way?

A great starting point for your Johnson & Johnson research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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