QS Research · Michael Burry's Scion Capital analyst template · 2006
JOHNSON & JOHNSON (JNJ)
As of 2026-11-06 · 12/15 boxes filled from SEC filings and market data
Conclusion: PASS
Conviction medium · base case 0% · downside -32% · upside +33%
The call is a pass: on TTM to Sep 27 2026 JNJ has $26.81B EBITDA, $44.65B debt, $1.40B leases, $17.23B cash and 2,407.31M shares, so at the given 25.7x EV/EBITDA the equity is about $661.1B, or about $274.6/share, essentially the $275.18 quote (N14, N20, N21, N22, N5, N1, N26). At PG's 17.8x the same EBITDA gives about $448.4B equity, or about $186/share (-32%), while LLY's 33.9x gives about $880.0B equity, or about $366/share (+33%). The market is not missing a cheap asset: it is paying a mix premium for a high-quality but patent-exposed franchise, and Q3 2026 adjusted EPS fell 7.5% even as sales rose 5.9%, with 2026 adjusted EPS guidance rebased to $11.10 from $11.68. With the base at today's price and symmetric but non-rule-meeting scenarios, there is no deep-value edge; wait for a lower price or evidence that adjusted earnings growth reaccelerates.
Key numbers
- Share price: $275.18
- Market cap: $662.44B
- Latest financial period: TTM to Sep 27, 2026
- Revenue (TTM): $99.33B
- EV / EBITDA (TTM): 25.7x
- P/E (TTM): 41.2x
- Price / book: 8.13x
The 15 boxes
- ✓ 1. Long-form business notes
JNJ reports two segments in the FY2025 10-K: Innovative Medicine (prescription medicines sold direct to retailers, wholesalers, distributors, hospitals and healthcare professionals) and MedTech (cardiovascular, orthopaedics, surgery, vision products sold to wholesalers, hospitals and retailers). This is a structural break from the oldest report on file, which describes three segments (Consumer Health, Pharmaceutical, Medical Devices). Revenue rose from $82.58B (FY ended 2021-01-03) to $94.19B (FY ended 2025-12-28) with gross profit of $63.94B, while operating cash flow was $24.53B and capex $4.83B in FY2025. The earnings line is distorted by items the sources do not identify: FY2023 net income of $35.15B exceeded pre-tax income of $15.06B, and FY2025 net income of $26.80B came on $32.58B pre-tax versus $14.07B on $16.69B pre-tax in FY2024, so cash flow and gross profit, not net income, are the cleaner read on the franchise. Concentration is high and shifting: DARZALEX/DARZALEX FASPRO was ~15.0% of FY2025 revenue with Genmab royalties of $2.4B, while STELARA fell from the largest product (9.3% of FY2020 revenue) to 6.5% of FY2025 revenue under biosimilar pressure.
- ✓ 2. Competitive advantage
The sources support scale and an innovation/IP-dependent franchise, not a clean durable moat: JNJ faces substantial competition in both operating segments and all geographic markets, and patent loss can cut sales quickly. FY2025 gross profit was $63.94B on $94.19B revenue and operating cash flow $24.53B, but the source data have no operating income, margin ratios, ROIC/ROE or named competitors.
- ✓ 3. 10-Q takeaways
The only 10-Q source provided is a one-line MD&A header for the quarter ended 2026-09-27, dated 2026-10-21. It contains no sales, margin, inventory, cash, buyback, guidance, or risk figures. Therefore the latest-quarter takeaways cannot be quantified from the provided material.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
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