Johnson & Johnson (JNJ): Has the Recent Rally Left the Healthcare Giant Undervalued?

Johnson & Johnson (JNJ) has quietly climbed about 17% over the past 3 months and roughly 44% year to date, putting the spotlight back on what investors are really paying for its steady healthcare engine.

See our latest analysis for Johnson & Johnson.

The move has been fuelled by renewed confidence in its Innovative Medicine pipeline and steady MedTech demand, with the roughly 44% year to date share price return outpacing its already solid multi year total shareholder returns and signalling strengthening momentum.

If Johnson & Johnson’s run has you rethinking your healthcare exposure, this could be a good moment to explore other potential leaders across healthcare stocks.

With shares now hovering near analyst targets but still trading at a hefty discount to some intrinsic estimates, the key question is whether J&J remains undervalued or if markets are already pricing in years of future growth.

Most Popular Narrative Narrative: 90% Undervalued

Compared with Johnson & Johnson’s last close at $207.32, the most widely followed narrative anchors on a fair value near $209, suggesting markets are still underestimating longer term earnings power.

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.

Read the complete narrative.

Want to see what justifies a higher multiple for a mature healthcare giant, and why modest growth plus fat margins still point to upside? The narrative leans on steady top line expansion, sticky profitability, and a future earnings base that only makes sense when you see how cash flows are discounted at a sub 7% rate. Curious how far those assumptions stretch before the fair value breaks?

Result: Fair Value of $209.29 (UNDERVALUED)

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

However, this view could unravel if talc litigation outcomes worsen or if Stelara’s loss of exclusivity hits margins harder than expected.

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

Build Your Own Johnson & Johnson Narrative

If this view does not quite match your own, or you would rather dig into the numbers yourself, you can build a custom narrative in just a few minutes: Do it your way.

A great starting point for your Johnson & Johnson research is our analysis highlighting 4 key rewards and 1 important warning sign 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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