Shares in retail giant Walmart (WMT) slipped today on reports that it is set to be added as a defendant in a baby formula botulism lawsuit.
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Walmart Set for Dock
According to a Bloomberg article, Walmart alongside fellow retailers Target (TGT) and Amazon.com’s (AMZN) Whole Foods will be added in the court case against baby formula maker ByHeart over a potentially contaminated product.
Foodborne-illness attorney Bill Marler, who represents families whose infants were hospitalized with botulism, said he plans to name the retailers for selling ByHeart formula allegedly contaminated with spores that cause the illness, the report said.
“ByHeart likely is insolvent and will likely go bankrupt — sooner or later. Retailers, that sold infant formula will need to step up — morally and legally — to help these families. These lawsuits will help that,” Marler wrote in a blog post.
The Centers for Disease Control and Prevention has said 51 babies who consumed ByHeart formula over the past two years were hospitalized with infant botulism, a potentially fatal infection.
Walmart, Target and Whole Foods did not comment.
Walmart’s Warning Letter
Earlier this month, the U.S. Food and Drug Administration (FDA) issued a warning letter to Walmart and other top grocery retailers for continuing to sell the recalled ByHeart baby formula.
The FDA released the letter on December 15, directing Walmart to improve its efforts to remove the recalled products from its store shelves.
In addition to Walmart, the FDA sent the same letter to retailers Target, Kroger (KR) and Albertsons (ACI). ByHeart initially recalled some of its baby formula on November 8, then expanded the recall to all of its baby formula inventory on November 11.
The issue shows how vulnerable retailers can be to legal and regulatory events. It is why it is a key risk for both the company and investors to consider – see above.
Is WMT a Good Stock to Buy Now?
On TipRanks, WMT has a Strong Buy consensus based on 25 Buy ratings. Its highest price target is $136. WMT stock’s consensus price target is $123.63, implying a 9.80% upside.
