Top 3 Reasons Savvy Investors Are Buying Johnson & Johnson Stock While Others Panic Over Lawsuits

When it comes to healthcare, few companies are as iconic or enduring as Johnson & Johnson (JNJ). With a legacy spanning nearly 140 years, J&J isn’t just a household name, it’s a global healthcare powerhouse with deep roots in pharmaceuticals, medtech, and consumer health (which recently spun off as Kenvue). 

From life-saving cancer treatments to advanced surgical tools, J&J plays a critical role in both patient care and innovation.

While peers like Pfizer and AbbVie battle patent cliffs and R&D setbacks, Johnson & Johnson continues to thrive through diversification, strong pipeline management, and steady global expansion.

Its drug segment, led by blockbusters like Darzalex and Tremfya, is supported by a fast-growing medical technology division that includes robotic surgery and orthopedics.

Yes, J&J faces headwinds: ongoing talc related lawsuits, public skepticism following multiple legal battles, and recent internal restructuring have cast shadows over its once pristine brand.

Investor confidence has been tested, and while the company has set aside billions for legal liabilities, uncertainty still looms over potential future settlements.

Still, Johnson & Johnson is anything but fragile. With a rock-solid balance sheet, AAA credit rating, and decades of consistent dividends, it remains one of the most resilient blue chip stocks in the market.

For long-term investors looking for both stability and innovation in the healthcare space, JNJ is a rare combination of both.

So is Johnson & Johnson an aging titan weighed down by litigation – or a long-term healthcare compounder hiding in plain sight?

Let’s break it down using the Invest Diva Diamond Analysis (IDDA) Framework:
Capital, Intentional, Fundamental, Sentimental, and Technical.

IDDA Point 1 & 2: Capital & Intentional

Before investing in Johnson & Johnson (JNJ), ask yourself:
✅ Are you looking for a reliable blue-chip stock with a 60+ year track record of dividend increases?
✅ Do you believe in long-term demand for healthcare, from advanced pharmaceuticals to medical devices?
✅ Do JNJ’s ongoing legal battles and talc related lawsuits sit okay with you or does it shake you?

Johnson & Johnson isn’t a high-flying growth stock or a market disruptor but that’s exactly what makes it a core holding for many long-term investors.

While others chase short-term hype, J&J continues to deliver steady value, global scale, and essential healthcare products across generations.

Yes, risks exist: ongoing talc lawsuits, reputational damage, and restructuring uncertainty could weigh on investor sentiment.

But J&J has weathered decades of challenges before, emerging stronger thanks to its diversified business model, AAA-rated balance sheet, and innovation pipeline in areas like immunology, oncology, and surgical robotics.

If you’re building a portfolio around stability, consistent dividends, and exposure to global healthcare demand, Johnson & Johnson could deserve a spot in your portfolio. 

Just know: this isn’t a stock for thrill-seekers. It’s a long term play on healthcare being one of the most essential and enduring industries on earth.

JNJ is for patient investors who value resilience, reliability, and real-world impact, no matter the market cycle.

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IDDA Point 3: Fundamentals

🔹Minimal China Exposure: Only approximately 15% of JNJ’s revenue comes from Asia and Africa combined. Since pharmaceuticals represent a small share of U.S. exports to China, JNJ is relatively insulated from trade tensions.

🔹Solid Earnings Performance: JNJ has posted strong earnings, maintaining profitability even with slightly lower profit margins.

🔹Attractive Dividend: With a 3.4% yield, one of the highest in a decade, JNJ continues to appeal to income seeking investors.

🔹Valuation Opportunity: The stock currently trades below its historical price-to-earnings range, suggesting potential upside for long-term investors.

🔹Macroeconomic factors: The U.S. may push to lower drug prices to match European levels, potentially cutting biopharma revenue by up to 24%. However, the immediate impact could be limited since the focus may be on Medicare hospital drugs, which only make up 10% of the market, and major changes remain unlikely without Congressional approval.

🔹Legal Battles: JNJ is currently facing significant legal challenges, particularly related to its talcum powder products. As of May 2025, over 58,000 lawsuits have been filed alleging that its talc based products, like Johnson’s Baby Powder, contained asbestos and caused cancers such as ovarian cancer and mesothelioma. In March 2025, a U.S. bankruptcy judge rejected J&J’s third attempt to resolve these claims through a $10 billion bankruptcy settlement plan, citing insufficient support from affected women and improper legal releases. Consequently, J&J plans to contest these claims in court.

Fundamental Risk: Low-Medium

IDDA Point 4: Sentimental

Strengths:

✅Strong Dividend & Financials – Reliable 3.4% dividend yield, 60+ years of increases, and solid balance sheet.

✅Low China Exposure – Minimal revenue impact from U.S.-China tariffs or trade volatility.

✅Robust Drug Pipeline – Heavy R&D investment and new drugs in the works, especially in oncology and immunology.

Risks:

❌Ongoing Legal Risks – Talcum powder lawsuits could lead to major financial and reputational hits.

❌Regulatory Pressure – Potential U.S. drug pricing reforms and executive orders could squeeze margins.

❌Slower Growth & Margin Pressure – Patent expirations and FX headwinds are weighing on profit margins and stock momentum.

Investor sentiment toward the biopharma industry has been positive, especially after President Trump’s drug pricing order, which investors saw as vague and unlikely to lead to major changes without Congress.

Johnson & Johnson (JNJ) is viewed as a safe and steady choice due to its low exposure to China, strong sales in the U.S. and Europe, and solid 3.4% dividend.

While short term price movement looks uncertain based on mixed technical signals, many believe the risks, like legal issues and profit margin pressure, are already reflected in the stock price.

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Sentimental Risk: Low-Medium

IDDA Point 5: Technical

On the weekly chart

🟨 The future Ichimoku cloud is extremely thin where it’s hard to determine whether it will be bullish or bearish.
🟨 The current candles are sitting within the cloud – signalling market indecision.
🟨 RSI is 47.29 – neither oversold nor overbought.

We can see that at one stage, JNJ was trending upwards, reaching a high of 172 up until mid-2022. Since then, it has been consolidating and trending sideways.

Technical signals appear mixed. At the moment, the future cloud is extremely thin. This makes it difficult to determine a bullish or bearish outlook and the current candles are sitting within the cloud, indicating market indecision.

It’s likely the pattern will continue consolidating, with 141 being a very strong support level. The current market price is sitting on the 23% Fibonacci retracement level.

Investors looking to add JNJ into their portfolio can consider these Buy Limit entries

📌Current market price 152.64 (High Risk)

📌141.66 (Medium Risk)

📌132.78 (Low Risk – might not reach)

Here are the Invest Diva ‘Confidence Compass’ questions to ask yourself before buying at each level:

1. If I buy at this price and the price drops by another 50%, how would I feel? Would I panic, or would I buy more to dollar-cost average at lower prices? (hint: this question also reveals your CONFIDENCE in the asset you’re planning to invest in).
2. If I don’t buy at this price and the stock suddenly turns around and starts going up again, will I beat myself up for not having bought at this level?

Remember: Investing is personal, and what is right for me might not be right for you. Always do your own due diligence. You should ONLY invest based on your own risk tolerance and your timeframe for reaching your portfolio goals

Technical Risk: Medium

Final Thoughts on JNJ

Johnson & Johnson (JNJ) is one of the most established names in global healthcare, with nearly 140 years of experience across pharmaceuticals, medical technology, and consumer health.

It’s known for steady performance, reliable dividends, and essential products like cancer treatments and surgical tools.

While it’s currently facing serious legal battles over talcum powder lawsuits and some restructuring uncertainty, its strong balance sheet and long history of resilience make it a favorite among long-term investors.

JNJ may not offer explosive growth, but for those seeking stability, dividend income, and exposure to long-term healthcare demand, it’s a solid choice to consider, even if short-term price movements remain mixed.

➡️ Recommendation: Buy or Hold / Medium Risk Asset – For medium risk-tolerant investors with a long-term mindset, Johnson & Johnson (JNJ) presents a stable opportunity in the healthcare sector for three key reasons. Its strong dividend history, diversified business model, and minimal exposure to geopolitical risks make it a solid choice for steady portfolio growth. While ongoing legal battles and slower growth may create headwinds, JNJ’s financial strength, innovation pipeline, and global healthcare presence provide a strong foundation. This stock is best suited for patient investors seeking resilience, consistent income, and long-term exposure to an essential industry, just be mindful of legal uncertainties and aim for smart entry points.

Overall Stock Risk: Medium

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