Johnson & Johnson: Reducing Corporate Risk And Increasing Growth


  • Johnson & Johnson announced that it will acquire Abiomed for $380 per share in cash, and will close before the end of the first quarter of 2023.
  • With Abiomed’s gross margins of 82%, higher than Johnson & Johnson’s, JNJ’s gross margin will increase after the merger.
  • The acquisition of Abiomed will provide further growth in Johnson & Johnson’s MedTech, but I think the acquisition price is on the high side.
  • Johnson & Johnson will spin off its consumer health segment in 2023 and rename it Kenvue to reduce corporate risk.
  • Abiomed as a growth catalyst, high shareholder cash returns and favorable valuation make Johnson & Johnson worthy of buying.

he modern architecture of business center of Johnson and Johnson, Allschwil



Johnson & Johnson (NYSE:JNJ) is a well-liked stock, as evidenced by its price performance over the past 10 years. Its total return is slightly lower than that of the S&P500, but its non-GAAP PE ratio of 18 compares favorably

Data by YCharts

Pharmaceutical Highlights - 3Q22 Investor Presentation

Pharmaceutical Highlights (3Q22 Investor Presentation)

MedTech Highlights - 3Q22 Investor Presentation

MedTech Highlights (3Q22 Investor Presentation)

Johnson & Johnson Financial Results - SEC and Authors own visualization

Johnson & Johnson Financial Results (SEC and Authors own visualization)

Johnson & Johnson Cash Flow Highlights - SEC and Author's own calculation

Johnson & Johnson Cash Flow Highlights (SEC and Author’s own calculation)

Data by YCharts

Data by YCharts

Johnson & Johnson Earnings Estimates - Seeking Alpha JNJ Ticker Page

Johnson & Johnson Earnings Estimates (Seeking Alpha JNJ Ticker Page)

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in JNJ over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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