Johnson & Johnson (JNJ) shares have slipped back to territory last seen in 2021, trading in the upper $170s—despite the company having made meaningful strides forward. Q2 results underscored steady momentum, with growth picking up modestly from Q1.
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Key engines remain oncology (DARZALEX, CARVYKTI) and immunology (TREMFYA), but the real bargain case now lies in MedTech. With Abiomed scaling, electrophysiology gaining traction, and early momentum building around OTTAVA, J&J is quietly transforming MedTech into a faster-growth pillar.
At today’s valuation, the market seems to be discounting that shift, leaving the stock looking undervalued. Layer in the dividend’s growing appeal with rate cuts likely ahead, and JNJ increasingly stands out as a bargain hiding in plain sight. I remain tentatively Bullish on JNJ.
Growth Picks Up Speed at the Right Time
JNJ’s Q2 carried a different rhythm—you could hear it both in the numbers and in management’s tone about the runway ahead. Reported sales climbed to $23.7 billion (+5.8% y/y), with operational growth of 4.6%, a step up from Q1’s 4.2% on $21.9 billion in revenue.
Innovative Medicine surpassed the $15 billion quarterly threshold for the first time, with 13 brands delivering double-digit gains, while MedTech accelerated to 6.1% operational growth. Confident in the momentum, management raised full-year sales guidance to a midpoint of approximately $93.4 billion and increased the adjusted EPS midpoint to $10.85.
Zoom in, and the growth engine reads like oncology first, immunology close behind. In Q2, Innovative Medicine grew 3.8% operationally, even while facing a roughly 1,170 bps Stelara headwind, an impressive feat of offense while playing defense. The lift came from DARZALEX (Q2 sales ~$3.54 billion), CARVYKTI (capacity is opening up and revenue more than doubled), ERLEADA, and the RYBREVANT/LAZCLUZE launch. TREMFYA continued to take share in immunology. Combine those, and you see how newer therapies are setting the pace for JNJ.
MedTech felt livelier, too. Operational growth of 6.1% to $8.54 billion was driven by Cardiovascular (+22.3% operational), with Abiomed’s Impella adoption still increasing and electrophysiology benefiting from new equipment, including VARIPULSE, TRUPULSE, NUVISION, and QDOT. Shockwave (which closed in 2024) adds another oar in the water. Vision benefited from new TECNIS lenses and ACUVUE OASYS MAX 1-Day, while Surgery continued to grind forward. And for longer-term intrigue, the team has now completed the first procedures with OTTAVA, their robotic platform, an early signal that robotics won’t be a one-horse race forever.
JNJ’s Margins Show Discipline Amid Headwinds
The margin walk paints a steadier picture than the headline EPS alone. Gross margin slipped to 67.9% from 69.4% a year ago, pressured by mix shifts (Stelara erosion, China VBP). Still, JNJ offset part of the drag through leaner operating expenses—SG&A fell to 24.8% of sales (vs. 25.3%) and R&D to 14.8% (vs. 15.3%). A lower effective tax rate (14.7% vs. 18.5%) further supported results, lifting GAAP EPS to $2.29 (+19%) even as adjusted EPS held steady at $2.77. Taken together, the P&L reflects disciplined execution despite well-telegraphed headwinds.
There were also quieter tailwinds. “Other (income)/expense” improved materially year over year, and management reduced its 2025 tariff cost outlook to approximately $200 million from $400 million, alleviating a small but tangible drag in the back half. While COGS crept up to 32.1% of sales from 30.6%, the mix shift toward faster-growing MedTech niches (Cardiovascular, EP) and higher-velocity oncology assets is the kind of pivot that tends to pay off over quarters, not weeks.
JNJ’s Dividend Power Meets Attractive Valuation
If approximating JNJ’s market value, at roughly $178 per share, JNJ trades about ~16x the company-anchored 2025 adjusted EPS midpoint ($10.85) and ~15–16x on widely tracked forward measures. That’s a shade below its typical mid-teens range, suggesting little froth for an AA-quality balance sheet and JNJ’s durable franchises. Note that the sector median valuation is above 18x, and few to no companies feature the qualities JNJ boasts.
The consensus looks steady at around $10.8–$10.9 for 2025 and approximately $11.37 for 2026, implying low-to-mid single-digit EPS growth as Stelara headwinds subside and newer assets scale. Based on those numbers, today’s price implies a multiple of ~15–16x in 2026, which is comfortable against JNJ’s long-run mid-teens norms and the fact that the stock tends to attract a large crowd of income-oriented investors.
Speaking of which, the board lifted the quarterly dividend 4.8% this April (to $1.30), an acceleration from last year’s 4.2% raise, marking 63 straight years of increases. Annualized at $5.20, that’s roughly a ~3% yield of around $178, with a record of growth that tends to matter when cash rates drift lower. Markets broadly expect the Fed to start cutting rates imminently, which only helps the relative math for reliable income, and JNJ could have income investors running for its shares again.
Is JNJ a Good Stock to Buy Now?
Wall Street remains relatively bullish on JNJ, with the stock carrying a Moderate Buy consensus rating based on eight Buy and nine Hold ratings over the past three months. No analyst rates the stock a Sell. However, JNJ’s average stock price target of $179.93 suggests only ~2% upside from current levels, implying that Wall Street remains relatively wary of the stock price-wise.
JNJ Shareholders Can Sleep Well at Night
Look, JNJ’s share price may look sleepy, but the operating story isn’t. Q2 showed faster growth than Q1, with oncology and MedTech carrying significant weight, and management raised guidance, all of which point to a thriving business.
Add the accelerating dividend increase and a forward multiple in the mid-teens, and the setup skews favorable, especially if rates ease and income investors chase the stock higher. Regardless, JNJ has proven to be a sleep-well-at-night stock for decades, and nothing seems to have changed in that regard.