Johnson & Johnson talc litigation risks ‘manageable’, says RBC Capital

RBC Capital keeps an Outperform rating and $181 price target on Johnson & Johnson after U.S. Bankruptcy Court denied the company’s request to confirm proposed prepackaged bankruptcy plan despite the support of over 85% of claimants. The firm notes however that while the decision is disappointing and unexpected, the company’s litigation risks are likely manageable because: JNJ is returning to the tort system to fight what it considers junk science where it has won 16 of 17 cases in the last 11 years; JNJ will redo the Daubert Challenge – burden on plaintiff to prove the scientific validity of their opinion – with potential to end Federal cases; JNJ has substantial cash and free cash flow; and there is no change in JNJ business outlook, the analyst tells investors in a research note.