Johnson & Johnson (JNJ.US) shares fell more than 3.5% to $159.60 in premarket trading Tuesday after a U.S. bankruptcy judge rejected the company's $10 billion proposal to resolve thousands of lawsuits alleging its talc products cause cancer.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appThe ruling marks the third time J&J's bankruptcy strategy has failed in court. Judge Christopher Lopez determined that the company's voting process was flawed and that at least half of the votes cast "cannot count."
Rather than appeal, Johnson & Johnson announced it would "return to the tort system to litigate and defeat these meritless talc claims" and will reverse approximately $7 billion previously set aside for settlement.
The company faces around 90,000 pending claims but maintains its products are safe and do not cause cancer. J&J stopped selling talc-based baby powder in the U.S. in 2020, switching to a cornstarch formulation.
Despite this setback, J&J's stock had gained roughly 15% year-to-date before the ruling.
Johnson & Johnson (D1 Interval)
The stock is trading near the 50-day SMA in premarket trading, which aligns with the 38.2% Fibonacci retracement level. Bears may target a retest of the 200-day SMA at $156.21, followed by the 100-day SMA. The RSI has failed to break its bearish divergence, maintaining lower highs, while the MACD remains narrow after a bearish crossover.
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.
