Buy or Sell Johnson & Johnson Stock?

We believe there are only a couple of things to fear in JNJ stock given its overall Strong operating performance and financial condition. This is aligned with the stock’s High valuation because of which we think it is Fairly Priced.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $500 Bil in market cap, Johnson & Johnson provides healthcare products globally, including baby care, pharmaceuticals for arthritis and inflammatory diseases, and MedTech solutions for cardiovascular treatments.

[1] Valuation Looks High

This table highlights how JNJ is valued vs broader market. For more details see: JNJ Valuation Ratios

[2] Growth Is Moderate

• Johnson & Johnson has seen its top line grow at an average rate of 6.1% over the last 3 years
• Its revenues have grown 5.1% from $88 Bil to $92 Bil in the last 12 months
• Also, its quarterly revenues grew 6.8% to $24 Bil in the most recent quarter from $22 Bil a year ago.

This table highlights how JNJ is growing vs broader market. For more details see: JNJ Revenue Comparison

[3] Profitability Appears Strong

• JNJ last 12 month operating income was $24 Bil representing operating margin of 26.2%
• With cash flow margin of 26.3%, it generated nearly $24 Bil in operating cash flow over this period
• For the same period, JNJ generated nearly $25 Bil in net income, suggesting net margin of about 27.3%

This table highlights how JNJ profitability vs broader market. For more details see: JNJ Operating Income Comparison

[4] Financial Stability Looks Strong

• JNJ Debt was $46 Bil at the end of the most recent quarter, while its current Market Cap is $500 Bil. This implies Debt-to-Equity Ratio of 9.2%
• JNJ Cash (including cash equivalents) makes up $19 Bil of $193 Bil in total Assets. This yields a Cash-to-Assets Ratio of 9.6%

[5] Downturn Resilience Is Strong

JNJ has been more resilient than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• JNJ stock fell 21.7% from a high of $186.01 on 25 April 2022 to $145.60 on 27 October 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 1 October 2025
• Since then, the stock increased to a high of $214.17 on 15 December 2025 , and currently trades at $207.78

 
2020 Covid Pandemic

• JNJ stock fell 27.8% from a high of $153.99 on 5 February 2020 to $111.14 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 23 April 2020

 
2008 Global Financial Crisis

• JNJ stock fell 35.5% from a high of $72.22 on 8 September 2008 to $46.60 on 9 March 2009 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 18 October 2012

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.