VALUATION HIGHLIGHTS

1. Pharmaceuticals constitute 78% of the Trefis price estimate for Johnson & Johnson's stock.
2. Medical Devices constitute 22% of the Trefis price estimate for Johnson & Johnson's stock.

WHAT HAS CHANGED?

Latest Earnings: Q4 and Full Year FY'2025

Johnson & Johnson reported full year 2025 sales of 93.5 billion dollars, reflecting a 5.2% increase over the previous year. Adjusted operational growth stood at 6.1%, driven by strong performance in the Innovative Medicine and MedTech segments. Adjusted diluted earnings per share (EPS) for the year reached 11.20 dollars, a growth of 7.5% compared to FY'2024. The primary drivers were the continued scaling of Darzalex in oncology and the integration of recently acquired cardiovascular technologies.

Note: Johnson & Johnson's FY'2025 ended on December 31, 2025.

Velys Spine Launch and Robotic Integration

The company recently announced the full commercial launch of the Velys Spine system, a core component of its digital surgery portfolio. This strategic pivot aims to capture a larger share of the high-growth robotic surgery market by integrating advanced imaging with real-time data analytics. This launch, coupled with the ongoing integration of Shockwave Medical, positions J&J to dominate the interventional cardiovascular and orthopedic technology sectors, offsetting potential revenue headwinds from biosimilar competition.

POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE

Below are key drivers of Johnson & Johnson's value that present opportunities for upside or downside to the current Trefis price estimate:

Innovative Medicine

• Stelara Patent Cliff: The entry of biosimilars for Stelara in 2025 presents a significant revenue risk. While Trefis estimates a moderate decline, faster-than-expected erosion of the 10 billion dollar franchise could lead to a 5% downside to the current valuation if new launches like Tremfya do not scale rapidly enough to fill the gap.


• Oncology Portfolio Expansion: J&J's oncology segment, led by Darzalex and Carvykti, continues to outperform. If Carvykti gains broader approval for first-line treatment in multiple myeloma earlier than anticipated, there is an upside potential of 8% to the segment revenue forecast over the next 24 months.

For additional details, select a division from the interactive Trefis split for Johnson & Johnson at the top of the page.

BUSINESS SUMMARY

Johnson & Johnson operates as a global healthcare leader focused on two primary segments: Innovative Medicine (Pharmaceuticals) and MedTech (Medical Devices), following the spin-off of its consumer health business, Kenvue.

SOURCES OF VALUE

The Innovative Medicine segment remains the most significant contributor to J&J's valuation due to its high-margin biologic therapies and robust R&D pipeline.

Oncology Market Dominance

J&J maintains a massive installed base in hematology-oncology. The sustained growth of Darzalex, which is now being utilized in subcutaneous formulations, provides a deep competitive moat. This dominance is supported by a multi-billion dollar annual R&D investment that ensures a steady stream of next-generation cell therapies.

MedTech Digital Ecosystem

The transition from standalone hardware to the Velys Digital Surgery ecosystem creates high switching costs for hospital systems. By bundling robotic platforms with specialty consumables in orthopedics and vision care, J&J secures long-term, recurring revenue streams that carry higher margins than traditional surgical tools.

KEY TRENDS

Precision Medicine and Biologics

The industry is shifting toward personalized biologic treatments and gene therapies. J&J is positioned to capitalize on this through its focused pipeline in immunology and oncology, leveraging data science to improve clinical trial success rates and target specific patient subpopulations more effectively than generic competitors.

Strategic Portfolio Reshaping

Following the Kenvue separation, J&J is executing a disciplined M&A strategy focused on high-growth MedTech and "pipeline-in-a-product" drug candidates. The company's recent 13 billion dollar acquisition of Shockwave Medical illustrates this shift toward specialized, high-margin cardiovascular interventions to drive long-term earnings growth.