On Friday, after a report by Reuters which stated that Johnson and Johnson had known for decades that some of it baby powders had traces of asbestos, the shares of the company declined by almost 9 percent.
As per the reviews of the Wall Street, one of its firms has stated that the weakness has been overdone.
In a note written by Chris Schott of JP Morgan to its clients on Friday, the team of analysts of the firm stated that they have noted that all the problems which were reported previously been disclosed as talc litigation discovery’s part.
The note further stated that on one hand when the team thinks of the risks to Johnson and Johnson they believe that it very unlikely that the exposure of the company to the issue of talc will be able to come close to $40 billion in the market capitalization which is lost today.
This was in reference to the drug liability of $21 billion for the firm fen-phen that was the largest in the history.
he note stated that along those lines, the firm believes that moves of today are nothing but an over reaction especially from the perspective of a longer term.
But the company, JP Morgan also notes that this story is not likely to recede any time soon and that this will definitely affect the shares of the company which will be trading a multiples that will be much lower and that too for an extended time period.
The shares of Johnson and Johnson had decreased by almost 5 percent for the current year and this was inclusive of the sell-offs of Friday.
Source: Business Insider, Reuters.
