Will the lawsuits sink Johnson & Johnson Stock?

[ad_1]

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Johnson & amp; Johnson (NYSE:JNJ) the stock is first class with capital B. With its solid dividend and AAA credit rating, we can not deny that the stock JNJ is of high quality. But can the legal problems of the company put her on her knees? "Data-reactid =" 11 ">Johnson & Johnson (NYSE:JNJ) The JNJ action is of high quality. But can the legal problems of the company put her on her knees?

Source: Various Photography / Shutterstock.com

The probable answer is no. Although multi-billion dollar judgments seem scary, the size of society can isolate it from these problems. Let's take a closer look at JNJ and see if the risks outweigh the opportunities with Johnson & Johnson stocks.

What is the worst that can happen?

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "As InvestorPlace contributor Josh Enomoto discussed on August 21stThe JNJ share has two significant legal risks. The first is the scandal of society related to asbestos contamination. For decades, Johnson & amp; Johnson would have remained silent about the cancer risks of his baby powder products. Civil litigation has been going on for years. But recently only federal authorities announce an investigation. Recent civil judgments were for $ 4.7 billion in July 2018, and $ 300 million in June 2019"data-reactid =" 26 "> As InvestorPlace Josh Enomoto, contributor, commented on August 21 that the JNJ action had two significant legal risks. The first is the scandal of society related to asbestos contamination. For decades, Johnson & Johnson has been silent about the cancer risks of its baby powder products. Civil litigation has been going on for years. But only recently have the federal authorities announced an investigation. Recent civil judgments amounted to $ 4.7 billion in July 2018 and $ 300 million in June 2019.

InvestorPlace – Stock market news, stock tips and trading advice

<p class = "canvas-atom-text-canvas Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "But the responsibility of JNJ could be much less. in this Bloomberg articlemost product liability judgments are reduced on appeal. But, as Enomoto mentioned in his analysis, bad public relations could harm Johnson & amp; Johnson stock. This scandal has been going on for years. The story is well known, but she did not make headlines. "Data-reactid =" 30 "> But the responsibility of JNJ could be much less heavy. Bloomberg Article, most product liability judgments are reduced on appeal. But, as Enomoto mentioned in his analysis, poor public relations could hurt Johnson & Johnson's stock. This scandal has been going on for years. Although the story is known, it did not make headlines.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "How about the opioid process of Oklahoma After years of ignoring the opioid crisis, federal authorities and states are joining forces, putting opioid manufacturers on the front burner, including JNJ. Oklahoma suit alleges JNJ's Janssen Pharmaceuticals unit aggressively marketed opioids. "Data-reactid =" 31 "> What about the lawsuit against opioids in Oklahoma? The complaint from Oklahoma alleges that the unit JNJ's Janssen Pharmaceuticals has aggressively marketed opioids.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Oklahoma seeks $ 17 billion in damages, but JNJ could end up paying a lot less. Purdue Pharma set for $ 270 million. Teva Pharmaceuticals (NYSE:SUITS YOU) set for $ 85 million. This means that JNJ could avoid a multi-billion dollar judgment. But JNJ is probably not out of the wood yet. Other states (or the federal government) could sue. "Data-reactid =" 32 "> Oklahoma claims $ 17 billion in damages, but JNJ could end up paying a lot less. Purdue Pharma settled for $ 270 million. Teva Pharmaceuticals (NYSE:SUITS YOU) settled for $ 85 million. This means that JNJ could avoid a multi-billion dollar judgment. But JNJ is probably not out of the wood yet. Other states (or the federal government) could pursue the action.

Do these legal risks have an impact on the valuation of JNJ shares? Let's see if stocks are selling at a discount (or premium) to peers.

JNJ Stocks at a fair valuation

Johnson & Johnson is currently trading at a forward price / earnings (P / E) ratio of 14.1. The company value / EBITDA (EV / EBITDA) of the company is currently 13 years. Here are the ratings of some of JNJ's competitors in the pharmaceutical industry:

Bristol-Myers Squibb (NYSE:BMY): Before P / E of 10, EV / EBITDA of 9.8

Eli Lilly (NYSE:THERE IS): Before P / E of 16.5, EV / EBITDA of 15.7

Merck (NYSE:MRK): Before P / E of 15.6, EV / EBITDA of 14.1

Pfizer (NYSE:PFE): Before P / E of 15.9, EV / EBITDA of 10.1

Based on this peer comparison, Johnson & Johnson shares appear to have a fair value. On a P / E futures basis, JNJ shares trade at a price higher than the BMY. On an EV / EBITDA basis, JNJ is in the middle of the pack. It seems that the recent legal problems have hardly had an impact on the course of the NYJ action. Shares are down about 12% from their 52-week high. It may take more to run a stock with a market capitalization of $ 346.4 billion.

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The JNJ action can be attractive to investors 2.9% return is not particularly high, JNJ is an aristocrat of the dividend.The company has increased the dividend 57 years in a row. But investors need to be cautious given the legal risks. JNJ may be lagging behind for much less than expected, but it is difficult to predict the outcome of the dispute. "Data-reactid =" 41 "> The JNJ stock may be attractive to investors in dividends .Although the yield of 2.91% is not particularly high, JNJ is aristocrat of the dividend.The company has increased the dividend 57 years in a row, but investors need to be cautious given the legal risks.

Not a big risk, but not a big opportunity

Johnson & Johnson will probably survive the storm of litigation. The judgment regarding talc seems high, but the company could appeal and reduce the final amount. The Oklahoma opioid case also presents a remarkable figure. Given the Purdue and Teva colonies, a multi-billion dollar verdict would be surprising.

However, the stock offers a limited rise. Shares appear to be relatively valued relative to peers. The aristocratic status of the company's dividend is a strong selling point. But for short-term games, the best opportunities are elsewhere. If legal issues affect JNJ's share price in the short term, investors can find an opportunity. Keep Johnson & Johnson on your radar and consider a position if the title has a significant drop in price.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "At the time of writing this article, Thomas Niel had no position in the aforementioned titles."data-reactid =" 49 ">At the time of writing this article, Thomas Niel had no position in the aforementioned titles.

More InvestorPlace

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The message Will lawsuits leak Johnson & amp; Johnson Stock? appeared first on InvestorPlace. "data-reactid =" 56 "> The message entitled The lawsuits at the origin of Johnson & Johnson Stock? appeared first on InvestorPlace.

[ad_2]

Source link