Morgan Stanley expects J&J to retrace some outperformance after talc ruling

Morgan Stanley notes that a judge in the Texas Bankruptcy Court dismissed Red River’s third attempt at resolving outstanding talc litigation via bankruptcy proceedings and as a result the firm expects Johnson & Johnson shares to retrace some of their year-to-date outperformance with the stock up nearly 15% year-to-date versus the S&P 500’s nearly 5% decline. The new ruling differs from the previous bankruptcy attempt in New Jersey, which was dismissed “due to lack of imminent and immediate financial distress,” notes the analyst, who points out that J&J’s prior commentary indicates that there could be an appeal or the company could go back to the tort system in the event of a denial. The firm has an Equal Weight rating and $163 price target on J&J shares, which are down $5.64, or 3%, to $160.20 in pre-market trading.