JNJ Stock Multiple Plunges as Earnings Growth Outpaces Revenue

Johnson & Johnson's stock price has been steadily increasing over the past year, reaching nearly $262 per share and resulting in a multiple of 27.5 times adjusted earnings.

This price is based on trailing revenue of around $98 billion and represents a slight decrease from the company's 52-week range.

The consensus estimate shows that Johnson & Johnson's earnings are expected to grow by about 16.2% annually over the next two years, while revenue growth is projected at around 5.3%, resulting in a significant margin expansion.

This margin expansion is primarily driven by the company's immunology business, where STELARA sales fell by 55.7% due to biosimilars taking market share, but TREMFYA grew by 71% and ICOTYDE has drawn over 10,000 patients onto therapy.

The stock's price is expected to remain relatively stable, with the multiple decreasing to around 20.4 times earnings in 2027 from its current level of 27.5 times. This would result in a slight increase in the stock's value, assuming the multiple settles at around 21.3 times earnings.