JOHNSON & JOHNSON

Business Overview and Recent Results

Following the August 2023 spin-off of the consumer health business as Kenvue, the company operates under a two-segment structure — Innovative Medicine (pharmaceuticals) and MedTech (medical devices) (10-K, as of 2025-12-28). Segment revenue mix for Q2 2026 was as follows.

As of the quarter ended 2026-06-28 · Source: company release (2026-07-15), SEC 8-K (A)

Within Innovative Medicine, TREMFYA and DARZALEX led growth (+7.8% reported), while within MedTech the Cardiovascular segment was the fastest-growing at +15.8% for FY2025 (driven by Abiomed and electrophysiology products). FY2025 full-year revenue was USD 94.20 billion (+6.0%) and net income was USD 26.80 billion; however, it should be noted that pretax income surged to USD 32.6 billion due to a one-time USD 7.0 billion reversal of talc litigation reserves included in that figure.

5-Year Revenue Trend

Over the same period, GAAP net income was highly volatile: USD 17.94 billion (FY2022) → USD 35.15 billion (FY2023) → USD 14.07 billion (FY2024) → USD 26.80 billion (FY2025). Both the FY2024 sharp decline and the FY2025 sharp increase appear to reflect one-time items related to talc litigation reserve accruals and reversals, but primary-source confirmation of the specific line items was not obtained in this research.

Peer Comparison

In dollar terms, JNJ ranks in the top tier of healthcare-sector market capitalization, second only to Eli Lilly and ahead of AbbVie, Merck, Abbott, and Pfizer. A comparison of trailing P/E ratios is as follows.

Around 2026-07-26 (lookup timing differs by company) · AbbVie's P/E was not obtained in this research

Valuation (Factual Multiples)

The industry (Drug Manufacturers) median forward P/E is 16.97x, meaning JNJ's forward P/E (21.70x) is roughly +22.7% above that level (StockAnalysis.com, as of 2026-07-26). EV/EBITDA figures vary significantly across sources depending on the lookup date and calculation basis (TTM GAAP vs. Adjusted estimates), so primary-source financial statement reconciliation was not obtained in this research.

Ownership & Flow Trends

The top three institutional holders are Vanguard at 10.1% (243,455,135 shares), BlackRock at 7.7% (186,308,341 shares), and State Street at 5.5% (132,996,283 shares) (DEF 14A, filed 2026-03-11, based on Schedule 13G). Form 4 filings between 2026-07-21 and 2026-07-24 showed two executives (Vanessa Broadhurst, Kathryn E. Wengel) disposing of a portion of their holdings after exercising stock options (proceeds of approximately USD 5.79 million, among other amounts); this appears consistent with routine executive compensation programs, and no separate signal of a large-scale increase or decrease in ownership was identified. Short interest rose somewhat from 0.85% in January 2026 to 1.10% in July, but since this compares figures from different third-party sources at different points in time, it is difficult to characterize this as a definitive trend.

Governance

JNJ is an independent publicly listed company with fully dispersed ownership and no controlling shareholder (10-K Exhibit 21, as of 2025-12-28). CEO Joaquin Duato also serves as Chairman of the Board, and Marillyn A. Hewson serves as Lead Independent Director (DEF 14A, filed 2026-03-11). In 2025, Daniel Pinto (from 2025-07-01) and John Morikis (from 2025-09-08) joined the board as new independent directors, and in the same year a special committee was formed to review a potential separation of the Orthopaedics business within MedTech (confirmation and timing per the proxy statement were not obtained). The 13G (A) filings cited for BlackRock and State Street were each filed in January 2024; whether these represent the most recently updated figures per the proxy statement was not obtained.

Macro Environment

The Fed funds rate target range remains at 3.50%–3.75% (effective rate 3.63% as of July 2026) following the hold at the June FOMC meeting. Prolonged high rates are a factor that raises JNJ's discount rate (WACC) and relatively weakens dividend appeal, though its AAA credit rating partially cushions funding-cost pressure. WTI crude surged to USD 90.47/barrel (2026-07-24, +25.79% over the past month), creating upward pressure on plastics- and chemicals-based input costs and logistics costs, though JNJ's high gross margin provides some absorption capacity. The first round of U.S. Medicare drug price negotiation (IRA) results took effect on 2026-01-01, sharply cutting unit prices for Xarelto (-62%) and Stelara (-66%), a factor already reflected negatively in actual Q2 2026 results (already realized). The U.S. Dollar Index (DXY) stands at 101.465 (2026-07-24) in a strengthening phase, which could exert downward pressure when converting JNJ's international revenue (approximately 42.7% of Q2 revenue) into dollars. Pharmaceutical supply chain disruption tied to Middle East geopolitical risk has been reported across the industry, but no direct impact on JNJ's individual operations has been confirmed.

Recent News Timeline

• 2026-07-22 · FDA granted De Novo authorization for MedTech's OTTAVA robotic surgical system (for soft tissue surgery, table-integrated)
• 2026-07-16 · DePuy Synthes completed its acquisition of spinal implant maker Expanding Innovations
• 2026-07-15 · Announced Q2 2026 results and raised full-year 2026 guidance
• 2026-07-10 · Illinois Appellate Court affirmed a USD 45 million talc-related damages verdict
• 2026-07-08 · FDA approved the Dual Energy THERMOCOOL SMARTTOUCH SF cardiac ablation catheter platform
• 2026-04-24 · Signed an agreement to acquire Atraverse Medical, a transseptal cardiac access technology company
• 2026-03-17/18 · FDA approved ICOTYDE (icotrokinra) — the world's first oral IL-23 receptor-targeting peptide treatment for psoriasis
• June 2026 (ASCO conference, exact date not obtained) · Phase 3 data for TECVAYLI+TALVEY combination therapy reported an 89% reduction in the risk of disease progression or death in early treatment of relapsed/refractory multiple myeloma

Risk Factors

• Talc baby powder litigation: More than 90,000 cases have been filed nationwide, of which 60,792 remain pending in the New Jersey multidistrict litigation (MDL 2738) as of July 2026. Repeated attempts to reach a global settlement through a subsidiary's Chapter 11 proceedings have been dismissed, causing a return to individual jury trials, and a one-time USD 7.0 billion reversal of related reserves was reflected in 2025 pretax income.
• Stelara patent cliff: Following the loss of U.S. exclusivity in January 2025, biosimilar competition drove revenue down 42.7%, from USD 10.3 billion in 2024 to USD 6.1 billion in 2025. Revenue is shifting toward Darzalex, Tremfya, and other products, but the pace of erosion in 2026 remains a key factor to watch.
• MedTech tariff costs: Projected to expand to approximately USD 500 million in 2026 versus the prior year, cited as a margin-pressure factor.
• Macro linkages: Prolonged Fed high-rate policy creates valuation pressure via a higher discount rate, and the surge in WTI crude (USD 90.47/barrel, +25.79% over one month) creates upward pressure on input and logistics costs.