Analysts are divided when it comes to Johnson & Johnson (NYSE:JNJ) stock. The medical device company experienced its share of ups and downs this year. It is currently one of many companies attempting to defend itself against ongoing opioid lawsuits.
In August, an Oklahoma judge found Johnson & Johnson guilty of deceptive marketing practices and fined the company $572 million. The company allegedly marketed its opioid products as non-addictive, in spite of repeated warnings from the FDA.
The question for investors is, how important is this verdict and what will the ongoing lawsuit mean for JNJ stock? Here are three things you need to know about the opioid lawsuits.
The JNJ Verdict Wasn’t as Bad as It Could’ve Been
One important thing to understand is that the Oklahoma ruling isn’t as bad as it could’ve been. The fine is substantially lower than the $17.1 billion that prosecutors were asking for.
And the fine was much lower than many investors feared it would be. According to a Cowen analyst, most investors thought the fine would reach into the billions.
And in terms of the company’s financials, $572 million is a drop in the bucket. Its revenue topped $81 billion in 2018 and its net income exceeded $15 billion. Plus, the company plans to appeal the verdict, though it’s unclear how successful that will be.
The Opioid Lawsuits Aren’t Going Away Anytime Soon
The opioid lawsuits are far from over. There are currently over 2,000 pending lawsuits across the country. And if Johnson & Johnson loses its appeal of the Oklahoma case, it will be forced to settle with other states that sued the company.
Not to mention, appealing the Oklahama verdict will take a long time. The case may not get settled before 2021. So this lawsuit could be dragging on for a long time.
Johnson & Johnson Is Built to Last
Finally, JNJ has been around for more than 130 years and is the largest healthcare company in the world. The company actively participates in nearly every aspect of the healthcare industry. That includes making consumer products, selling medical equipment, and making and distributing pharmaceuticals.
And investors looking for stocks that consistently pay a healthy dividend should look no further. Over the past five years, JNJ stock increased its dividend five times, with an average annual increase of 6.34%.
So JNJ is a company that’s built to last. The opioid lawsuits will cause short-term problems for the company. JNJ stock has remained relatively flat over the last year and is up 2.4% in 2019. But the company should persevere in spite of its challenges.
As of this writing, Jamie Johnson did not hold a position in any of the aforementioned securities.
