Johnson & Johnson (NYSE:JNJ) has agreed to a $700 million settlement to resolve allegations of misleading consumers about the safety of its talcum-based powder products. The $700 million settlement will be paid out in four installments to 42 states over three years, starting at the end of July 2024.
The pharmaceutical giant will also permanently cease manufacturing and selling all talcum powder-based products, including Johnson’s Baby Powder and Shower to Shower. The company’s withdrawal from these product lines represents a strategic shift to manage litigation risks and move away from products linked to health controversies.
For years, JNJ’s talcum powder products have been under scrutiny due to potential health risks, including links to cancer from possible asbestos contamination—a recognized carcinogen. The company stopped distributing and selling these products in the U.S. in 2020 after a coalition of states initiated investigations.
JNJ’s Risk Analysis
The settlement marks a significant milestone in Johnson & Johnson’s years-long legal battles over allegations that its talcum powder is linked to cancer. With thousands of claims filed, the company has faced considerable legal challenges.
In May 2024, the company announced plans to pay $6.5 billion to settle nearly all U.S. lawsuits alleging its talc-based products caused ovarian cancer. The company’s efforts to resolve these claims reflect a strategic move to mitigate ongoing litigation risks and restore investor confidence. However, the financial burden of these settlements could impact Johnson & Johnson’s profitability and stock performance.
As JNJ faced several litigations, TipRanks’ Risk Analysis tool shows its legal and regulatory risk exposure is significantly higher than the industry average. It’s worth noting that JNJ’s legal and regulatory risks account for 36.4% of its total risks, much higher than the industry average of 19%.
Is JNJ Stock a Buy or Sell?
Wall Street is cautiously optimistic about JNJ stock. It has eight buys and seven Holds for a Moderate Buy consensus rating.
JNJ stock is down about 5% year-to-date. The analysts’ price target on JNJ stock is $174.86, implying 19.15% upside potential from current levels.
