A closely watched California talc lawsuit is pending against Johnson & Johnson (JNJ), adding uncertainty over whether tens of hundreds of other plaintiffs posing for the company will log off on J&J’s proposed $8.9 billion settlement offer or seek their very own days in court. Jim Cramer believes the biopharmaceutical company had “an excessive amount of hope” to win. “The plaintiff’s system is against them,” said Jim. Despite this, he added, “I think J&J is an incredible American company, I think they are going to look it over. … They have to be a bit more realistic about what they are saying.” Jim’s discussions with J&J’s legal team led him to consider that there is likely to be a solution to win a case that we consider is crucial. But on Tuesday, J&J was ordered to pay $18.8 million after juries found in favor of 24-year-old Emory Hernandez Valadez, who claimed in his lawsuit that he developed mesothelioma, a deadly asbestos-related cancer, consequently of exposure to J&J’s talc products. Ultimately, we’re unsure how this decision will affect J&J’s separate federal court filing for bankruptcy of a recent subsidiary, LTL Management, where the company will she sewed exposure to the talc disputes. Often in bankruptcy proceedings there may be a pause in the consideration of latest cases. But Valadez’s lawsuit was dismissed because of his failing health. JNJ YTD top Johnson & Johnson YTD Results The verdict is “very significant” in accordance with Moshe Maimon, a partner at Levy Konigsberg LLP who won significant awards in talc lawsuits against J&J filed on behalf of his clients. “Judgments like the Valadez case speed up the talc case rather more quickly than bankruptcy filings,” Maimon said. J&J said greater than 60,000 claimants support its latest $8.9 billion settlement, which is because of be paid out over 25 years. Nevertheless, about 40,000 others oppose it. The support of a 75% majority of applicants would set a transparent path to victory in the LTL case. Johnson & Johnson issued an official statement after the verdict in favor of Valdez, meaning to appeal. “We thank the jurors for his or her efforts, but we intend to appeal based on the trial judge’s erroneous rulings,” J&J said on Wednesday. J&J vehemently denies that its now recalled talc products have ever contained asbestos or ever caused cancer. The subsequent step in this long-running legal saga is more likely to come in early August from US Chief Bankruptcy Judge Michael Kaplan’s LTL Bankruptcy Proceedings. If Kaplan rejects the bankruptcy filing, J&J will revert to the tort system. In such a case, the company intends to “aggressively fight claims,” in accordance with Erik Haas, global vp, global affairs. “We feel very confident that we will prevail in the overwhelming majority of claims, as we’ve got done in the past under the tort regime,” he added. J&J reported strong second-quarter profit and revenue on Thursday. While stocks skyrocketed on positive earnings – and added to those gains on Friday – the talcum issue continues to be an overhang. Still, J&J got several increases in its Wall Street price goal on Friday. One was from Stifel, which raised its share price to $175 from $165 and maintained a hold rating. One other got here from Credit Suisse, which rose to $175 from $170 and maintained a neutral rating. SVB Leerink increased its PT to $190 from $186 and reiterated its buy equivalent advice. Just hours after Thursday’s Q2 release, we confirmed our 1 rating and $195 price goal for the stock. Encouraged by the company’s strong operating performance and management’s updated information on Kenvue Separation (KVUE), we’re cautious about the talc situation. “We do not anticipate any additional individual actions” aside from bankruptcy beyond the Valadez case, Haas added during the call. Nevertheless, Maimon expects more litigation ahead: “There might be applicants and plaintiffs who wish to spend the day in court and who will push their cases to court.” He explained that in this scenario, J&J would likely go the route of settling talc legal disputes, which historically finally ends up being the majority of such cases. J&J’s subsidiary, LTL Management, filed for Chapter 11 bankruptcy to guard itself from talc litigation while settling hundreds of lawsuits filed against the company. The entity that was created to carry the talc liabilities offered a settlement of $8.9 billion to be paid in segments over 25 years to claimants as a solution to end ongoing talc disputes. Looking ahead, there may be concern that Tuesday’s verdict in California may lead other plaintiffs to drop out of the settlement. We consider there’ll only be pressure from the company and a greater path for investors to take further motion once there may be more clarity around the proposed talc compensation plan. Conclusion Uncertainty regarding the fate of bankruptcy prevents us from increasing our J&J position. Nevertheless, Jim said it was an issue “for the stock, not for the company”. Beyond the talcum saga, J&J’s business fundamentals are very strong. Jim likes fast-growing J&J for its AAA balance sheet and great product range, which he believes are long-term catalysts for stocks. The division of J&J’s consumer health division into Kenvue, which went public in May, also needs to create more shareholder value over time. Higher-growth pharmaceutical and medical technology firms remain as recent J&Js. Kenvue’s separation is predicted to be accomplished by the end of the yr. (Jim Cramer’s Charitable Trust is JNJ’s debts. The total list of shares could be found here.) As a subscriber to the CNBC Investing Club, together with Jim Cramer, you’ll receive a transaction notification before Jim completes the transaction. Jim waits 45 minutes after sending a trade alert before buying or selling shares from his charity fund’s portfolio. If Jim was talking about stocks on CNBC, he’ll wait 72 hours after the trade alert is posted before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, INCLUDING OUR DISCLAIMER. NO CUSTOMER OBLIGATION OR DUTY RECEIVED BY YOU RECEIVED ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO PARTICULAR RESULT OR PROFIT IS GUARANTEED.
On this photo, a Johnson and Johnson baby powder container is displayed on April 5, 2023 in San Anselmo, California.
Justin Sullivan | Getty’s paintings
A closely watched California talc trial is to the contrary Johnson & Johnson (JNJ), adding uncertainty over whether tens of hundreds of other plaintiffs posing for the firm will log off on J&J’s proposed $8.9 billion settlement offer or seek their very own days in court.