Investors sold off shares of Johnson & Johnson on Friday after a Reuters report said the company knew for decades that its baby powder contained asbestos, an allegation J&J has denied.<\/b>
\nJohnson & Johnson lost $39.8 billion in market value Friday, suffering its worst trading day in more than 15 years, after Reuters said the company knew for decades that its baby powder contained asbestos \u2014 an allegation the company denied.
J&J said the story was \u00ab\u00a0one-sided, false and inflammatory\u00a0\u00bb and an \u00ab\u00a0absurd conspiracy theory,\u00a0\u00bb according to a statement.
Thousands of lawsuits have accused J&J’s talc-based baby powder for containing asbestos and causing ovarian and other types of cancers. Investors have expressed some concern over the lawsuits, though J&J has successfully won a number of cases.
Friday’s report spooked the Street and drove J&J’s shares down 10.04 percent to close at $133 a share, losing about $39.8 billion of its market value. J&J now has a market capitalization of $356.7 billion. The shares recovered somewhat after tumbling as much as 11.9 percent in intraday trading.
The pummeling was the company’s worst trading day in more than 15 years \u2014 when its shares closed down 15.85 percent on July 19,2002. Friday was the company’s fifth-worst trading day on record.
Analysts viewed the sell-off as overdone. Wells Fargo called Friday’s moves \u00ab\u00a0excessive.\u00a0\u00bb J. P. Morgan called them an \u00ab\u00a0over-reaction.\u00a0\u00bb
Wells Fargo’s Larry Biegelsen said in a note to clients even if J&J settled all 11,700 cases for $280,000 each, the highest per case settlement amount among the cases it has followed, the total liability would be $3.3 billion. J. P. Morgan’s Chris Schott echoed Biegelsen, saying J&J’s exposure to the legal risk probably won’t come close to the amount J&J lost in market value Friday.<\/p>\n