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J&J Offers Up To $5B In US Opioid Addiction Settlement

support@smarteranalyst.com (Ben Mahaney)
·2 min read

Johnson & Johnson said it will contribute up to an additional $1 billion for a potential settlement agreement to resolve US opioid lawsuits which would take the total to $5 billion.

J&J (JNJ) said that the amount represents an increase to the $4 billion agreement in principle announced by a committee of US State Attorneys General on October 21 last year. Additional terms and conditions are still being finalized, the US drugmaker said.

“This additional amount results from continued negotiations and is intended to maximize participation in the settlement,” J&J wrote in a statement. “The settlement is not an admission of liability or wrongdoing, and the Company will continue to defend against any litigation that the final agreement does not resolve. The settlement will provide certainty for involved parties and critical assistance for families and communities in need.”

J&J, one of the largest suppliers of the raw materials used to produce opioid pain medications, has been accused of playing a key role in expanding the use of prescription opioids. J&J is among a number of drug companies who have allegedly fueled the opioid epidemic in many US states by embarking on a deceptive marketing campaign and convincing doctors and the public that their drugs are effective for treating chronic pain and have a low risk of addiction.

On Tuesday, JNJ reported mixed earnings results with Q3 Non-GAAP EPS of $2.20 beating by $0.22 but GAAP EPS of $1.33 missing Street estimates by $0.37. Encouragingly, revenue of $21.08B improved 1.7% year-over-year and beat the Street by $930 million. Looking ahead, JNJ boosted its revenue guidance to $81.2 billion – 82 billion from $79.9 billion - 81.4 billion and Non-GAAP EPS: $7.95-8.05 from $7.75-7.95.

JNJ shares have more than fully recovered since plunging to a multi-year low in March and are now trading 1.7% higher than at the start of year. (See JNJ stock analysis on TipRanks).

Following 3Q results, Raymond James analyst Jayson Bedford reiterated a Buy rating on the stock, saying that the revenue beat was fueled by better-than-feared results from the medical devices segment.

“The midpoint of the implied 4Q revenue guidance brackets consensus, but the EPS guide is lower than consensus (but above RJe),” Bedford wrote in a note to investors. “We assume that there is some conservatism in this guide.”

Overall, the rest of the Street shares Bedford’s bullish outlook on the stock. The Strong Buy analyst consensus boasts 7 unanimous Buy ratings. That’s with a $168.57 average price target indicating 14% upside potential lies ahead in the coming 12 months.

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