Johnson & Johnson (JNJ) has won critical support from plaintiffs for its proposed $6.5 billion settlement related to the years-long talc powder litigation. According to a Bloomberg report, over 75% of plaintiffs have voted in favor of JNJ’s proposed settlement via secret ballot, a key threshold set by the lawsuit.
The plaintiffs alleged that the use of JNJ’s baby talc and other powder products caused cancer owing to the asbestos contamination.
JNJ’s Talc Litigation Settlement
The passing of the 75% threshold means that JNJ will be able to file for Chapter 11 bankruptcy for its LTL Management subsidiary. This will also pool all the claimants together into a group settlement. JNJ would pay $6.5 billion over 25 years toward current and future settlements, involving claims that its products caused ovarian and other gynecological cancers. The deadline for the ballot was set for July 26. After earning this major win, JNJ is expected to proceed with the bankruptcy filing and end the litigation.
This is JNJ’s third attempt to file for bankruptcy protection for the LTL Management unit. The judge rejected the previous two efforts. JNJ is following a “Texas Two-Step” approach that involves placing all talc liability into one separate unit and then applying for bankruptcy under Chapter 11. This ensures that all plaintiffs are pooled under one settlement and protects the main company, JNJ from legal hassles.
The future of the case now depends on the bankruptcy judge, who will decide whether or not to grant the bankruptcy. Meanwhile, the plaintiffs’ attorney called the ballot a “fake bankruptcy election” and is confident that the judge will not cede. The attorney is even ready to challenge the decision.
Hedge Funds Load Up JNJ Stock
Regardless of the ongoing billion-dollar lawsuits, TipRanks’ Hedge Funds Trading Activity tool shows that hedge funds are loading up Johnson & Johnson stock. Currently, JNJ has a Very Positive Hedge Fund Confidence Signal, as hedge funds increased their JNJ holdings by 1.4 million shares in the last quarter.
Is JNJ Stock a Buy or Sell?
Wall Street remains divided on JNJ stock’s trajectory owing to the ongoing legal drama and challenges in the healthcare sector. On TipRanks, JNJ has a Moderate Buy consensus rating based on seven Buys versus eight Hold ratings. The average Johnson & Johnson price target of $173.14 implies 8.3% upside potential from current levels. Shares have gained 3.6% year-to-date.
