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Appeals Court Rules Against J&J but Cuts Talc- Powder Verdict

Zacks Equity Research
·3-min read

A Missouri appeals court rejected Johnson & Johnson’s JNJ appeal to overturn a St. Louis jury verdict in 2018 to pay $4.69 billion in damages to 22 women who claimed that its talc-based products caused them to develop ovarian cancer. The Eastern District Missouri Court of Appeals slammed the company for knowingly selling a drug that causes cancer. The court, however, reduced the verdict to $2.1 billion arguing that 17 of the 22 plaintiffs were not from Missouri and should not have been included in the verdict. J&J plans to further challenge the appeals decision in the Missouri Supreme Court.

J&J stock has declined 2% this year so far compared with the industry’s decrease of 1.8%.


The company faces more than 19,000 lawsuits for its talc-based products, primarily its baby powders. Lawsuits have been primarily filed in state courts in Missouri, New Jersey and California as well as outside the United States. The lawsuits allege that the company’s talc products contain asbestos, a known carcinogen, which afflicted many women with ovarian cancer. There have been verdicts against J&J in its talc lawsuits.

In May this year, J&J announced that it is permanently discontinuing the sale of its talc-based Johnson’s Baby Powder in the United States and Canada. Management confirmed that demand for the product has been declining, which it blamed on “misinformation around the safety of the product” amid a barrage of legal challenges.

J&J consistently denied allegations and insisted thattalc-based products are safe and do not cause cancer. However, the issue has been weighing on the company’s stock price for some time now.

The link between talc and cancer has been rumored for decades but remains scientifically unproven. It is suggested that the connection between talc and cancer may be due to the fact that traces of talc and asbestos often occur together in deposits and get inadvertently mixed.

J&J currently has a Zacks Rank #3 (Hold).Some better-ranked large-cap pharma stocks are Eli Lilly & Company LLY with a Zacks Rank #1 (Strong Buy) at present, and AstraZeneca AZN and AbbVie ABBV, both currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Lilly’s shares have risen 21.2% this year so far. Its earnings estimates for 2020 and 2021 have inched up 0.7% and 1%, respectively, over the past 90 days.

AstraZeneca’s shares have rallied 8.8% this year so far. Its earnings estimates for 2020 and 2021 have risen 1% and 1.6%, respectively, over the past 60 days.

AbbVie’s shares have been up 9.9% this year so far while its earnings estimates for 2020 and 2021 have risen 6.5% and 6.6%, respectively, over the past 90 days

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