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Johnson & Johnson is the eighth most widely held stock in Vestact New York portfolios. We like it for its broadly diversified portfolio of healthcare assets - pharmaceuticals, medical devices and consumer products.
The company posted quarterly results yesterday which beat profit expectations, but forecast slower revenue growth in 2019. Global sales rose by 6.7 percent in 2018, but are projected to rise only marginally in 2019 to about $81 billion. The stock fell 1.4% in a generally soft market.
J&J's litigation costs doubled to $1.29 billion in the fourth quarter, and the company said the majority of the reported expenses reflected efforts to resolve older cases in its medical devices business and included costs related to litigation on its talcum powder.
The company was cruising for a great year in 2018 until mid-December, when a story broke on Reuters that they had known for decades about the presence of asbestos in its baby powder. They have repeatedly denied wrongdoing and said at the time the article was "false" and that its well-known product was "safe and asbestos-free", however it resulted in the biggest one-day drop in its shares since 2002.
That came on top of a case where Mark Lanier, a high-profile Houston plaintiffs' lawyer, argued that the real cause of his clients' cancer wasn't the talc but the asbestos hidden in the talc. He also argued that the company should be punished for its decades-long failure to reveal its presence. After a six-week trial, and a mere eight hours of deliberation, a jury in St. Louis awarded his 22 clients $4.7 billion. Of that amount $4.1 billion was punitive damages.
The asbestos and talcum problem seems way overblown to me. There are a whole slew of lawsuits still pending, but even those where juries have awarded the plaintiffs ludicrously large awards are likely to be overturned on appeal. In repeated studies with large groups of individuals, no link has been found between the use of baby powder and increased incidence of ovarian cancers.
More on that asbestos issue here, on Bloomberg.com.