Shares of Johnson & Johnson (NYSE:JNJ) plunged on Friday amid reports the consumer healthcare company had recalled some of its baby powder after government testing found traces of asbestos in one of the bottles.
Already bogged down by thousands of lawsuits tied to its leading baby powder product, Johnson & Johnson confirmed on Friday that the U.S. Food and Drug Administration (FDA) found tiny amounts of asbestos in one bottle purchased online. The company says it’s investigating whether the bottle originated from one of its warehouses. Nevertheless, it has already recalled a lot containing 33,000 units of the product.
Despite the ongoing lawsuits levied at JNJ, Friday’s discovery marked the first time the company had recalled its baby powder due to asbestos concerns. The known carcinogen has been linked to cancers and other illnesses.
A single testing of JNJ baby powder last month found no asbestos in the product.
Since 2003, Johnson’s baby powder sold in the United States has come from a Chinese supplier linked to Paris-based Imerys AIMPT.PA. As Reuters reports, the company has known for decades that miniscule amounts of asbestos were found in its talc, a clay mineral used to create baby powder.
Johnson’s stock price plunged by as much as 5.5% on Friday, reaching the lowest level in three weeks. At its lowest point, JNJ traded at $128.74. The stock has a total market capitalization of $340.7 billion, making it one of the largest companies in the Dow Jones Industrial Average (DJIA).
Only three Dow blue chips are valued more than Johnson & Johnson.
The New Brunswick, New Jersey-based company hasn’t fared too well this year. Its stock has vastly under-performed the broader U.S. stock market despite reporting solid quarterly earnings.
Following a better than expected second quarter, the company boosted its sales forecast for the year and reiterated its profit guidance.
Earlier this week, Johnson reported third-quarter earnings and revenue that were better than expected thanks to higher sales of prescription drugs. Adjusted per-share earnings came in at $2.12 versus $2.01 expected. Revenues were $20.73 billion, which were slightly higher than forecast.
Last modified: September 23, 2020 1:11 PM