JNJ - Embedded Expectations Analysis - 2022 05 27
Johnson & Johnson (JNJ) currently trades below corporate but near historical averages relative to Uniform earnings, with a 16.3x Uniform P/E (Fwd. V/E').At these levels, markets are pricing in expectations for Uniform ROA to compress from 25% in 2021 to 17% in 2026, accompanied by 3% Uniform asset growth.
Meanwhile, analysts expect Uniform ROA to only fade to 22% in 2023, accompanied by 6% Uniform asset growth.
If sustained going forward, these levels would imply a stock price closer to $275, representing significant potential equity upside for the firm.
That said, the firm's most recent earnings call suggests management may have concerns about pharmaceuticals, growth opportunities, and demand levels.
Johnson & Johnson is a holding company engaged in the research and development, manufacture and sale of a range of products in the health care field. The company has three business segments: Consumer, which includes a range of products focused on personal healthcare used in the beauty, over-the-counter pharmaceutical, baby care, oral care, women's health and wound care markets; Pharmaceutical, which is focused on six therapeutic areas: immunology, infectious diseases, neuroscience, oncology, cardiovascular and metabolism and pulmonary hypertension; and Medical Devices, which includes products used in the orthopaedic, surgery, interventional solutions, and eye health fields.
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