You may not think of the company behind Tylenol, Splenda, and Band-Aids as being a hot investment proposition, but here we are. Low valuation and high dividend yield are a great combination. Johnson & Johnson (NYSE: JNJ) stock is currently presenting what may be its most attractive investment opportunity in over a decade. Despite the company's strong performance, the stock has remained stagnant since 2021, leading to an appealing valuation.
JNJ's Q1 2024 results were robust, with sales reaching $21.4 billion, a 3.9% year-over-year increase. U.S. market sales grew by 7.8%, offsetting a slight decline in international markets. Gross margin improved to 69.6%, up from 68.0% in the previous year, due to a favorable sales mix and effective cost management. JNJ raised its adjusted operational EPS guidance for 2024 to $10.60-$10.75, representing a 7.7% year-over-year growth and a new record for the company.
The company also had upbeat FY2024 projections, noting its profit potential despite recent years of underperformance.
What's New?
Last year, Johnson & Johnson spun off its consumer-facing healthcare business into a new company. Kenvue, now fully independent and publicly traded, concentrates on consumer health products, while Johnson & Johnson focuses on pharmaceuticals and medical devices. Its Innovative Medicine segment showed significant growth, particularly in multiple myeloma, prostate cancer, and plaque psoriasis treatments.
Other initiatives include collaborations to improve health equity and its Healthy Lives mission, which aims to use eco-friendly packaging in its consumer brands. Recent innovations include digital tags for tracking medical devices, a new Alzheimer’s blood test, and AI solutions across the healthcare landscape.
What The Analysts Are Saying
Despite expectations of record profits, JNJ's stock is trading at a forward P/E of 14.4x, its lowest valuation since late 2012 (excluding the brief March 2020 market crash). The stock's dividend yield has reached 3.3%, its highest level in 12 years, making it particularly attractive for dividend-growth investors.
Wall Street analysts give JNJ a Moderate Buy consensus rating, with an average price target of $173.92. It’s currently trading at $156.58.
Julie Stoller does not have positions in this company. Stocks.News has positions in JNJ.
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Contributing Writer
As a professional writer since 2012, Julie Stoller has covered many industries, from healthcare and technology to consumer products and industrials. She has written about IPOs, spinoffs, ETFs, stock splits, commodities, legislative actions impacting investors, and macroeconomic issues. While keeping up with the latest meme stocks and trends, Julie's special interests are discovering ...