Is Johnson & Johnson (JNJ) overvalued or undervalued?
Updated Nov 10, 2026 · hand-researched model · educational, not advice
At a recent price of $282.11, Johnson & Johnson (JNJ) trades 64% above TickerWorth's blended fair value of $172.36 per share — a discounted-cash-flow model cross-checked against peer multiples and asset value — meaning the market currently prices JNJ overvalued vs our estimate of what the business is intrinsically worth. Our fair value sits below the market, an implied -38.9% move to close the gap if the business performs in line with our assumptions. This is an educational model, not a price target or a recommendation — the value moves with the inputs, which you can test yourself using the WACC slider below.
One of the lenses behind that blended figure is a discounted-cash-flow model, which on its own values JNJ at about $231.04 per share. The rest of this page walks through that DCF — its assumptions, reverse-DCF and discount-rate sensitivity — because it is the auditable anchor of the blend.
The valuation discounts Johnson & Johnson's projected free cash flows at a weighted-average cost of capital (WACC) of 6.7%, with a long-run terminal growth rate of 2.5%. About 82% of the enterprise value comes from the terminal value — the portion beyond the explicit forecast window — which is typical for a stable, cash-generative business and a reminder that small changes in the discount rate or terminal growth assumption swing the intrinsic value meaningfully.
Running the DCF in reverse — solving for the growth the current price already assumes — the market is implying roughly 8.9% annual revenue growth for JNJ. Our base case instead compounds to about 5.7% a year over the same forecast, so the market is pricing in materially faster growth than our base case. The reverse-DCF is a quick sanity check: it reframes 'is this stock cheap?' as 'do I believe the growth the price requires?' rather than arguing over a single point estimate of fair value.
Sensitivity matters more than any single number. Across a reasonable band of discount-rate assumptions, JNJ's modeled DCF value ranges from about $144.17 to $570.87 per share. If that range still sits below today's price, the market is optimistic relative to the model across the whole band; if it brackets the price, the stock is roughly fairly valued on our assumptions. Use the interactive slider to see exactly where your own cost-of-capital view lands.
How to read this page: the DCF fair value is what Johnson & Johnson would be worth if its cash flows grow as modeled and are discounted at the stated WACC. The assumptions table shows every input and its source; the reverse-DCF shows what the market believes; the sensitivity band shows how fragile the answer is. None of this is investment advice — it is a transparent, auditable framework for forming your own view of JNJ's intrinsic value. Figures update as new filings and prices come in.
The assumptions behind JNJ's DCF
| Input | Value | Source |
|---|---|---|
| Base-year revenue | $94,193,000,000 | FY2025 Form 10-K (filed 2026-02-11) — Consolidated Statements of Earnings; Note 17 segment sales: Sales to customers $94,193M, +6.0% on FY2024's $88,821M. Post-Kenvue continuing operations only, in two segments: Innovative Medicine $60,401M (64.1%) and MedTech $33,792M (35.9%). Innovative Medicine growth was driven by DARZALEX, CARVYKTI, ERLEADA and RYBREVANT/LAZCLUZE in oncology, TREMFYA in immunology and SPRAVATO in neuroscience, against an approximately 1,040-basis-point drag from STELARA biosimilar erosion (Q4/FY2025 release). Consumer Health (Kenvue) was separated in 2023 and appears nowhere in these continuing operations — its only trace in the recent filings is below the operating line (a $0.4B loss on the 2024 debt-for-equity exchange of the retained stake). |
| Base EBIT margin | 29.7% | Assumption — Q4/FY2025 earnings schedules, 8-K Ex-99.2 (filed 2026-01-21) — Reconciliation of Non-GAAP Financial Measures, twelve months ended 2025-12-28; FY2025 Form 10-K Consolidated Statements of Earnings and Note 5 (intangible amortization in cost of products sold): DERIVED on Johnson & Johnson's own adjusted (non-GAAP) reconciliations, the ABBV/BMY/PFE treatment for a company whose GAAP margin is distorted by litigation and deal accounting — then charged with the same three normalized loads the forecast carries, so base and forecast are on one basis. STEP 1, GAAP OPERATING BUILD (revenue less cost of products sold, selling/marketing/administrative, R&D, in-process R&D impairments and the restructuring line; interest and Other (income) expense excluded): $94,193M - $30,256M - $23,676M - $14,665M - $81M - $228M = $25,287M = 26.85%. STEP 2, ADD BACK THE PRE-TAX SPECIAL ITEMS THE COMPANY'S OWN RECONCILIATION REMOVES (twelve-month schedule): acquired-intangible amortization $4,621M (the 10-K states amortization included in cost of products sold was $4.6B in FY2025), restructuring-related $512M, acquisition/integration/divestiture-related $285M, Orthopaedics-separation $48M and IPR&D impairments $81M = $30,834M = 32.74% PRE-LOAD. Litigation never enters this build at all: J&J books litigation inside Other (income) expense, net — the line this build excludes — so the FY2025 litigation CREDIT of $6,040M (a ~$7.0B reversal of the previously accrued talc reserve, partly offset by a $0.8B Auris shareholder-litigation charge) is neither credited here nor in the forecast; it is replaced by the normalized load in Step 3. STEP 3, THE LOADS (see forecast.ebit_margin for the year-by-year sizing): litigation/legal 1.00 point, perennial restructuring and separation 0.50 points, bought-pipeline / acquired-intangible replenishment 1.50 points = 3.00 points. 32.74% - 3.00% = 29.74%, the value used. CROSS-CHECKS: the company's adjusted earnings before tax were $31,681M = 33.6% of sales (that measure still carries net interest income and an adjusted Other line, so it is not the operating margin); the identical pre-load build on the first nine months of 2026 (Q3 2026 schedules) prints 33.22% before loads — $74,771M - $24,254M - $18,751M - $11,832M - $375M - $247M = $19,312M, plus amortization $3,732M, restructuring $533M, Orthopaedics separation $746M, acquisition-related $142M and IPR&D impairments $375M = $24,840M — and that nine-month build is AFTER a $1.0B Firefly Bio acquired-IPR&D charge sitting inside Q3 R&D expense, which this model does not add back. |
| Forecast revenue growth | 7% → 6% → 6% → 5% → 4% | Assumption — TickerWorth's 5-year explicit forecast |
| Risk-free rate | 5.2% | FRED DGS10 — 10-year US Treasury constant maturity yield: Shared house input: the same 5.24% used by every researched model in this tracker, held so values stay comparable across companies. The current FRED print is lower (4.96% on 2026-10-22, per the LLY model's check); refreshing it for J&J alone would print $247.46 and break comparability — it is a tracker-wide update, flagged here rather than smuggled into one company's model. |
| Beta | 0.33 | Assumption — Yahoo Finance JNJ quote (delayed) — published beta; own regressions of JNJ on VOO from Yahoo dividend-adjusted price history: Measured here against VOO (the S&P 500 ETF) from Yahoo dividend-adjusted closes (log returns): 0.22 (5Y monthly), 0.07 (3Y monthly), -0.00 (2Y weekly), -0.43 (1Y weekly), -0.03 (2Y daily) — a median of approximately 0.00. Published beta is 0.21, consistent with the 5Y monthly window rather than the median. NORMALIZED UP to 0.33 with the standard Blume adjustment of the median (0.67 x 0.00 + 0.33 = 0.33), the same treatment this tracker applied to ABBV (median 0.12 -> 0.41), LLY (0.42 -> 0.61), BMY, SNY and PFE — and the task's pharma precedent: if the raw median is implausibly low, normalize it and disclose the cost. The cost here is the largest in the file: at the raw median of ~0.00 the value is $374.46, about $143 a share higher; at the published 0.21 it is $269.13, essentially today's price (engine variants in the explainer). Reason: the measurement windows are dominated by J&J's own defensive re-rating — the stock rose roughly 30% in the year to the Q3 2026 print largely on its own story (post-Kenvue focus, the talc overhang lifting and resolving) while carrying $44.7B of debt and a live litigation docket; a regression reads that as no correlation, not no risk. At the raw median the cost of equity would be 5.24% — exactly the house risk-free rate, and below the 4.85%-5.00% coupons J&J itself paid on its 2025 ten-year dollar notes only by accident of the stale house rate; equity in a company with 76,500 talc plaintiffs cannot be priced as a Treasury. The negative 1Y weekly window (-0.43) is the clearest illustration: J&J rose almost regardless of the market, which describes the last year, not the risk of the next ten. |
| Terminal growth | 2.5% | Assumption — House default — long-run nominal growth ceiling applied across the tracker: Shared house input (2.5%), identical in every researched model in this tracker. For J&J this is a real judgement, not a formality: the terminal year is 2030, by which time STELARA's erosion is long absorbed but the DARZALEX/TREMFYA generation faces its own late-decade patent questions that no filing read for this model dates precisely — so 2.5% forever assumes J&J keeps replacing expiring waves the way TREMFYA and the oncology portfolio are replacing STELARA, and the bought-pipeline load charged inside the forecast margins is part of what pays for that replacement. |
| Diluted shares | 2,446M | Q3 2026 Form 10-Q (filed 2026-10-21) — Consolidated Statements of Earnings (weighted-average diluted shares, nine months) and Consolidated Balance Sheets (share census): Weighted-average DILUTED shares for the nine months ended 2026-09-27: 2,445.8M (basic 2,408.1M; Q3 alone diluted 2,448.6M; FY2025 diluted was 2,429.4M). THE CENSUS, checked rather than assumed: the Q3 balance sheet shows 3,119,843,000 shares issued less 712,725,000 shares held in treasury at cost ($76,184M contra-equity) = 2,407,118,000 shares outstanding — treasury shares the company bought back (repurchases were $5,953M in FY2025 and $5,958M in the first nine months of 2026), held by no outsider, the ABBV fact pattern. The diluted count is that census plus about 39M of dilutive securities, so house convention and census agree in direction and differ only by the dilution the EPS count exists to capture. Dividing by the outstanding census of 2,407.1M instead would print $234.75, about $3.71 higher a share. |
| Market price | $282.11 | Delayed quote · as of 2026-11-10 05:34 UTC |
Compare JNJ with its peers
Companies people research alongside JNJ
Explore more
Most undervalued stocks (per our valuation) · Undervalued Healthcare stocks · All valued stocks · Interactive JNJ valuation & downloadable modelTickerWorth is an educational DCF tool, not a licensed investment adviser. Figures are estimates derived from public filings and market data and can be wrong.