JNJ
Johnson & Johnson
$253.85
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 24.7% above fair value
You pay
$253.85
Bear
$174.53
Fair
$203.63
Bull
$232.71
Bear
$174.53
-31.2%
$12.75 × 12x P/E
Fair
$203.63
-19.8%
$12.75 × 14x P/E
Bull
$232.71
-8.3%
$12.75 × 16x P/E
Key Value Driver
Normalized P/E multiple (14x base case)
Implied Market Multiple
19.9x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $262.17 from 40 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $203.63 per share.
Warnings
Dividend-based valuation: $135.71 (below our primary estimate by 24%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $262.17 (from 40 analysts). Our estimate is 32% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples