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J&J is swamped by opioid fears and lawsuits, but Wall Street isn't worried

Anjalee Khemlani
Senior Reporter


Johnson and Johnson (JNJ) is facing mounting legal liability associated with the opioid crisis and its own and Risperdal drug — but investors are mostly taking the bad news in stride as the company gets set to report earnings.

Analysts have repeatedly said the company is strong enough to handle the onslaught of legal battles, which some estimate could cost anywhere between $20 billion and $50 billion when all is said and done. Analysts, on average, expect the company to report earnings of $2 per share on $20.08 billion in revenue, according to Bloomberg.

Since the company posted its second quarter earnings, it has been hammered on multiple fronts, including an $8 billion verdict in Philadelphia that linked its anti-psychotic drug Risperdal to male breast growth; $77 million worth of liability in tainted talcum powder cases in New Jersey and California, and a $572 million opioid verdict in Oklahoma. The company recently settled for $20.4 million in the first of the multi-district opioid case in Ohio.

Massachusetts Attorney General Maura Healey takes questions from members of the media during a news conference, Monday, Sept. 16, 2019, in Boston. Healey detailed her efforts to continue to pursue Purdue Pharma and the Sackler family despite the company's decision to file for bankruptcy late Sunday, Sept. 15, 2019. (AP Photo/Steven Senne)

Yet since closing at a 2019 low last month under $127, the stock has slowly clawed higher. It reflects what analysts at Credit Suisse recently wrote was the company’s strong pipeline of products, and an ability to absorb the big dollar lawsuits heading its way. Several Wall Street firms rate JNJ’s stock as a “Buy” or “Hold”, with a price target between $140 - $150 per share.

The drug giant plans to appeal both the Oklahoma opioid verdict and the Risperdal verdict, which could reduce its exposure to thousands of lawsuits.

However, the lawyers pursuing the opioid makers are determined, said Jacob Rich, a policy analyst for Reason Foundation — and the lead lawyer “wants to grab about $100...billion, at least,” he told Yahoo Finance on Monday.

Johnson & Johnson is seen as a bellwether for the health sector’s earnings this quarter, along with United Health Group (UNH).

Yahoo Finance's conference on generational opportunities, October 10, 2019.


Anjalee Khemlani is a reporter at Yahoo Finance. Follow her on Twitter: @AnjKhem

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