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Johnson and Johnson today

JNJ

Johnson and Johnson

$147.03 -0.74 (-0.50%)

As of 3:59 pm ET

This is fair market value as provided by Polygon.io. Find out more.

52 week range

$140.68

▼

US$168.85

Dividend yield

3.37%

P/E ratio

21.28

Target price

$174.29

The deal will build on Johnson & Johnson’s 70 years of expertise in neuroscience. In particular, the company now adds Inside-cellular communication KAPLITA® to your portfolio of medicines. It is a once-daily tablet that has received FDA approval for the treatment of schizophrenia and is the only FDA-approved drug for the treatment of depressive episodes associated with bipolar depression. CAPLYTA is currently being evaluated for additional indications.

However, the acquisition also gives Johnson & Johnson access to Intra-Cellular’s promising clinical-stage portfolio, which includes drugs to treat generalized anxiety disorder, as well as the psychosis and agitation that may be part of Alzheimer’s disease.

It’s clear that Johnson & Johnson is focusing on mental health at a time when it’s never been more important. However, after years of trading, shareholders must question whether the valuation is attractive enough to warrant consideration for JNJ shares in 2025.

The biopharmaceutical industry is an “adapt or die” industry. Among healthcare stocks, Johnson & Johnson is well positioned to thrive in this industry. In addition to its diversified portfolio, the company’s strong balance sheet allows it to grow through acquisitions.

Intra-Cellular is the latest example of this, but it’s not the only deal JNJ has done in recent years. The company paid $13.1 billion for Shockwave Medical in 2024 and bought Abiomed for $16.6 billion in 2022.

Johnson & Johnson’s revenue this year is projected to be $88.5 billion, down about 4% from the previous year. The company’s ability to pay for these acquisitions is not in question, and it does not receive a significant share of the company’s profits. But that raises the company’s net debt to a somewhat uncomfortable level of 66%.

However, investors are rallying behind biopharmaceutical companies with GLP-1 drugs; some may want to see Johnson & Johnson’s investment pay off in earnings before assigning a premium to the stock. This is reflected in their wait-and-see stance on JNJ stock. In 2024, the company earned the dubious distinction of being one of the “Dogs of the Dow.” Over the past three years, JNJ stock has had a total return of negative 5.3%. This is especially important given the company’s dividend yield of 3.3%.

While the average price-to-earnings (P/E) ratio of the S&P 500 Index is around 24.8x, it’s worth noting that as of January 15, 2025, JNJ stock is trading at an attractive forward earnings of 14.5x. The valuation is accompanied by a dividend that produces a respectable dividend yield of 3.3%.

In fact, Johnson & Johnson is one of the companies that is part of the exclusive Dividend Kings group. The company has increased its dividend for 62 years in a row, and the company’s strong balance sheet backs up the dividend.

And with the stock down about 10% in 2024 compared with the S&P 500’s return of about 21%, JNJ has room to make up ground as investors move out of tech stocks and look for areas of growth.

JNJ stock has been trading below its 50-day simple moving average (SMA) since late October. This coincided with the company’s third-quarter earnings report. However, as of midday trading on January 16, 2025, the stock was within 2% of that technically significant mark.

A key catalyst for the stock could be the company’s earnings report on January 22. A significant break above this level could be a sign that investors are becoming more optimistic about this undervalued dividend king.

A break above the 50-day SMA would also align with Johnson & Johnson analysts on MarketBeat, which has a consensus price target of $174.41 for JNJ stock. This will give investors 18.7% upside potential in addition to a stable dividend.