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Johnson & Johnson Stock Poised to Rise on This New Decision

Story Highlights

Heightened litigation costs have compelled Johnson & Johnson to discontinue its famous product. Meanwhile, top investors are bulking up on the company’s stock as they remain confident about its future prospects.

Pharmaceutical giant Johnson & Johnson (NYSE: JNJ) has recently revealed that the company will discontinue the sale of its talcum-based baby powder in 2023.

Shares of the company declined 2.1% to close at $167.14 in yesterday’s trading session.

Why is JNJ Stopping the Sale of Baby Powder Globally?

Amid widespread litigation, reduced customer demand, and safety concerns, Johnson & Johnson has decided to stop sales of one of its most famous products globally. The baby powder has already been discontinued in the United States and Canada since 2020.

The baby powder manufactured by the company has come under a lot of criticism. The chief among them is talc, a mineral that is crushed to create Johnson’s Baby Powder. This mineral can cause inflammation that leads to cancer. Some of the lawsuits also alleged that the powder contained traces of asbestos, which has been linked to an increased risk of mesothelioma.

Notably, Talc lawsuits against Johnson & Johnson in the U.S. are on hold currently as the company’s subsidiary, LTL Management LLC, filed for bankruptcy last year.

Meanwhile, to fight against these various lawsuits related to its baby powder, Johnson & Johnson has shelled out roughly $3.5 billion so far. Also, more lawsuits are expected in the coming years.

The company is slated to report its third-quarter results on October 18, 2022.

Is Johnson & Johnson Stock a Good Buy?

Despite numerous headwinds due to countless litigation, top investors remain confident about Johnson & Johnson’s stock.

TipRanks’ Stock Investors tool shows that top investors currently have a Very Positive stance on JNJ. Further, 9.3% of the top portfolios tracked by TipRanks, increased their exposure to JNJ stock over the past 30 days.

Overall, the Wall Street community remains cautiously optimistic about the stock with a Moderate Buy consensus rating based on eight Buys and four Holds. The JNJ average price forecast of $188.73 implies the stock has an upside potential of 12.9% from current levels. Shares have declined 4.6% over the past year.

Key Takeaways

Johnson & Johnson has decided to discontinue the sale of its well-known baby powder due to rising litigation costs. With the reduction in these costs, the company can channel these funds towards more fruitful endeavors, which can enhance its value.

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