About JOHNSON & JOHNSON
Johnson & Johnson, together with its subsidiaries, researches and develops, manufactures, and sells various products in the healthcare field worldwide. The company's Consumer Health segment offers baby care products under the JOHNSON'S and AVEENO Baby brands; oral care products under the LISTERINE brand; skin health/beauty products under the AVEENO, CLEAN & CLEAR, DR. CI:LABO, NEUTROGENA, and OGX brands; TYLENOL acetaminophen products; SUDAFED cold, flu, and allergy products; BENADRYL and ZYRTEC allergy products; MOTRIN IB ibuprofen products; NICORETTE smoking cessation products; and PEPCID acid reflux products. It also offers STAYFREE and CAREFREE sanitary pads; o.b. tampons; adhesive bandages under the BAND-AID brand; and first aid products under the NEOSPORIN brand. It serves general public, retail outlets, and distributors.
The company's Pharmaceutical segment offers products for rheumatoid arthritis, psoriatic arthritis, inflammatory bowel disease, and psoriasis; HIV/AIDS and COVID-19 infectious diseases; mood disorders, neurodegenerative disorders, and schizophrenia; prostate cancer, hematologic malignancies, lung cancer, and bladder cancer; thrombosis, diabetes and macular degeneration; and pulmonary arterial hypertension. This segment serves retailers, wholesalers, distributors, hospitals, and healthcare professionals directly for prescription use. Its MedTech segment provides electrophysiology products to treat cardiovascular diseases; neurovascular care products to treat hemorrhagic and ischemic stroke; orthopaedics products in support of hips, knees, trauma, spine, sports, and other; advanced and general surgery solutions that focus on breast aesthetics, ear, nose, and throat procedures; and disposable contact lenses and ophthalmic products related to cataract and laser refractive surgery under the ACUVUE brand. This segment serves wholesalers, hospitals, and retailers. The company was founded in 1886 and is based in New Brunswick, New Jersey.
JNJ operates in the Manufacturing | Pharmaceutical Products | headquartered in New Brunswick, New Jersey | approximately 152,700 employees | led by CEO Joaquin Duato.
The $432.8B question: What happens when a company this good becomes this expensive?
In the alphabet soup of healthcare investing, few stories capture the tension between innovation and regulation quite like JOHNSON & JOHNSON. The company stands at the intersection of scientific possibility and market reality.
At $432.8B in market capitalization, JOHNSON & JOHNSON (JNJ) currently ranks #5 in our quantitative model, with a composite score of 80.4/100. That places it firmly in "Strong Buy" territory — our highest conviction rating.
But here's the thing about stocks priced for perfection: They leave no room for error.
The Numbers That Matter
Let's start with what's undeniably true. Our 6-factor model gives JNJ the following scores:
| Factor | Score | Weight | Assessment |
|---|---|---|---|
| Quality | 86/100 | 30% | Exceptional |
| Value | 79/100 | 15% | Fair |
| Momentum | 72/100 | 25% | Accelerating |
| Investment | 32/100 | 10% | Low |
| Stability | 88/100 | 10% | Fortress |
| Short Interest | 57/100 | 10% | Normal |
The quality score of 86/100 is the headline here. It reflects profitability metrics that would make most CFOs weep with envy:
- ROE: 25.3%
- Net Margin: 21.5%
- Gross Margin: 69.6%
These aren't just good numbers. They're the kind of numbers that make JNJ a "must-own" stock for institutional portfolios.
The Bull Case
"If you could design a business in a laboratory, it would look something like JNJ."
The bull case writes itself:
- Quality is persistent. Academic research shows high-quality stocks outperform by 4-6% annually over long periods. JNJ is quality defined.
- Momentum is real. With a momentum score of 72/100, the stock has been recognized by the market — and momentum tends to persist.
- The moat is deep. Companies with these margins don't lose them easily. The competitive position is entrenched.
The Bear Case
But here's what keeps value investors up at night:
- Valuation compression risk. At current levels, the stock is priced for continued perfection. Any stumble — a missed quarter, a competitive threat, a macro slowdown — could compress the multiple from 17.2x to the low 20s. That's a 20-30% decline without anything fundamentally "wrong."
- The crowded trade problem. When everyone owns a stock, who's left to buy? Momentum works until it doesn't.
- Mean reversion. Trees don't grow to the sky. At some point, growth decelerates.
The Valuation Framework
| Scenario | Assumption | Fair Value | Upside/Downside |
|---|---|---|---|
| Bear | Multiple compression to 20x | -20% | Downside |
| Base | Current trajectory continues | +10-15% | Modest upside |
| Bull | Momentum accelerates | +30-40% | Significant upside |
The risk-reward is ... fine. Not exceptional. Not terrible. Just fine.
The Bottom Line
JOHNSON & JOHNSON is exactly what it appears to be: a high-quality business with strong momentum trading at a premium price. Whether that's attractive depends entirely on what kind of investor you are.
For long-term, buy-and-hold investors, JNJ is a core holding. For value investors or short-term traders, look elsewhere.
The company is priced for perfection — and in markets, as in life, perfection is a fragile thing.
⭐⭐⭐⭐⭐ Rating: 5-Star Strong Buy
Score: 80.4/100 | Rank: #5 of 3,571 stocks
Sector: Healthcare
This analysis reflects the views of Blank Capital Research as of February 16, 2026. It is not investment advice. Past performance does not guarantee future results.
