Summary
- Reuters story causes sell-off for Johnson & Johnson Friday.
- Multiple analysts are backing up Johnson & Johnson, stating that the decline was overdone.
- A dramatic pullback opens up all kinds of buying opportunities for one of the world's leading consumer staples brands.
The Story
Johnson & Johnson (JNJ) was down over 10% Friday following the release of a report by Reuters that the company knew for decades that asbestos was in their baby powder. This is the largest single day decline at Johnson & Johnson since 2002.
JNJ responded by saying the report is "one sided, false, and inflammatory". Whether the report is true or not, it caught investors eyes as this normally slow moving consumer staples stock took an unexpected dive, down nearly -$15 per share Friday. Reuters said that after examining documents between 1971 to 2000 Johnson & Johnson's baby powders sometimes tested positive for asbestos, a known cause of cancer. JNJ noted that studies over over 100,000 people shows their talc powders (Figure 1) do not cause cancer or asbestos related diseases. The company is working through approximately 11,700 product liability lawsuits pertaining to the incident.
