It’s seldom a good sign when the government wants to talk about your business. At the very least, it’s usually an audit. At the worst, however, whole agencies take aim at your practices which can lead to huge fines or possibly worse. Amazon (NASDAQ:AMZN) is about to face the worst of it as the Food and Drug Administration (FDA) is preparing an investigation. Despite this, Amazon is up fractionally in Wednesday afternoon’s trading.
The FDA is coming down on Amazon over the matter of selling “unapproved” drugs on its site. More specifically, the FDA is targeting Amazon over drugs that treat molluscum contagiosum, a skin condition that has no over-the-counter treatments that have been approved by the FDA. Four products that purport to do just that, according to letters from the FDA, are currently available for sale on Amazon.
Furthermore, this is the third such warning the FDA has sent Amazon in the last 12 months alone. Moreover, over the last several years, “multiple” warning letters about similar practices have gone out to Amazon. Amazon isn’t the only one taking these hits, though; Walmart (NYSE:WMT) also got hit recently over an unapproved molluscum contagiosum treatment as well. One of the biggest issues is that these treatments are being marketed for use with children, and that could be disastrous if something goes wrong. This could be a serious problem for Amazon, much more so than issues of remote work or free shipping thresholds that it was facing earlier this week.
Yet, this does little to diminish analyst support for Amazon. Amazon stock has 40 Buy ratings and one Hold, which gives it a Strong Buy consensus rating. Further, Amazon stock boasts 29.78% upside potential thanks to its average price target of $175.63.
