Johnson & Johnson’s
JNJ,
decision to pay up to $8.9 billion over 25 years to settle claims connected with cosmetic-talc litigation is a positive for the stock as it removes the overhang of negative headlines, JP Morgan analysts said Wednesday. “A settlement could significantly accelerate the timeline for talc litigation resolution relative to ongoing litigation (with investors broadly avoiding litigation/uncertainty in the sector) and the $8.9 billion committed is in-line with our $8-10 billion estimate (which translates to ~$3.50/share for JNJ),’ analysts wrote in a note to clients. “And while there is still uncertainty on if this bankruptcy re-filing will be accepted by all parties involved, we do note that JNJ has secured commitments from over 60,000 current claimants to support a global resolution on these terms.” A federal appeals court in January rejected the consumer products and drug maker’s move to place its talc liabilities into bankruptcy, saying that the subsidiary was not in financial distress. Johnson & Johnson has faced thousands of lawsuits alleging that cosmetic talc in its products was connected to cancers, asbestos poisoning and other illnesses. The stock rose 2.9% premarket but has fallen 10% in the last 12 months, while the S&P 500
SPX,
has fallen 9%.
