J&J shares set for largest daily decline in 3 years due to talc setback
J&J shares set for largest daily decline in 3 years due to talc setback
Johnson & Johnson Faces Setback in Talc Lawsuits
Johnson & Johnson (JNJ.N), one of the largest pharmaceutical companies in the world, experienced a significant blow on Monday as its shares plummeted 4.1%. This drop marked the biggest one-day percentage loss for the company since June 2020. The decline came after a U.S. judge rejected the company’s second attempt to settle tens of thousands of talc-related lawsuits 1.
Talc lawsuits against Johnson & Johnson allege that its baby powder and other talc products contained asbestos, leading to serious health conditions such as mesothelioma, ovarian cancer, and other cancers. The company has consistently maintained that its talc products are safe and asbestos-free 2. However, the court’s ruling jeopardizes an $8.9 billion settlement proposed by Johnson & Johnson to halt further lawsuits 3.
This recent rejection follows a similar outcome in January when a U.S. appeals court dismissed the company’s attempt to transfer lawsuits to a new entity through bankruptcy proceedings. That ruling marked the first major setback for a legal strategy that had the potential to reshape corporate liability law in the United States 4. The inability to find a resolution to the talc litigation continues to hang over Johnson & Johnson’s stock, causing concerns among investors and analysts alike.
Morgan Stanley analyst Terence Flynn expressed apprehension about the impact of the ongoing talc lawsuits on the company’s stock. In a research note following the court’s ruling, Flynn emphasized that the lingering litigation remained an overhang on Johnson & Johnson’s stock. Despite this, Flynn rates the company’s stock as ‘equal-weight’ and maintains a price target of $187, slightly higher than the median Wall Street price target of $180 5.
The market response to the news was evident as Johnson & Johnson’s stock price fell to $167.33, reaching its lowest level since July 20 6. This decline further underscores the concerns surrounding the talc litigation and the potential financial implications for the company. With 23 analysts covering Johnson & Johnson, it is clear that the market is closely monitoring the outcome of these lawsuits 7.
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The talc lawsuits have impacted Johnson & Johnson on multiple fronts. In August 2022, the company announced that it would cease the global sale of talc-based baby powder in 2023, more than two years after discontinuing its sales in the United States 8. This decision was likely prompted by the rising number of lawsuits and the reputational damage caused by the ongoing litigation.
In conclusion, Johnson & Johnson’s attempt to settle the talc-related lawsuits has faced another setback, resulting in a significant drop in the company’s stock price. The legal disputes surrounding the alleged presence of asbestos in its talc products have impeded the company’s efforts to find an amicable resolution. As the lawsuits continue, Johnson & Johnson remains under scrutiny, and its future financial stability could be impacted by the final outcome of these legal battles.
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Reuters. July 31. Shares of Johnson & Johnson set for biggest one-day fall since June 2020.↩︎
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Reuters. July 31. Shares of Johnson & Johnson set for biggest one-day fall since June 2020.↩︎
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Reuters. July 31. Shares of Johnson & Johnson set for biggest one-day fall since June 2020.↩︎
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Reuters. July 31. Shares of Johnson & Johnson set for biggest one-day fall since June 2020.↩︎
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Reuters. July 31. Shares of Johnson & Johnson set for biggest one-day fall since June 2020.↩︎
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Reuters. July 31. Shares of Johnson & Johnson set for biggest one-day fall since June 2020.↩︎
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Reuters. July 31. Shares of Johnson & Johnson set for biggest one-day fall since June 2020.↩︎
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Reuters. July 31. Shares of Johnson & Johnson set for biggest one-day fall since June 2020.↩︎
