Johnson and Johnson upside? [Video]

Giles Coghlan LLB, Lth, MA Financial Source

Johnson and Johnson are trying to revive its attempts to get the US supreme court to resolve tens of thousands of lawsuits over its talcum powder products through the bankruptcy of a subsidiary company. This ongoing dispute concerns allegations of contamination in J&J’s talc product, which J&J denies. If J&J manages to succeed with this attempt then this could offer a significant upside to J&J. However, critics view J&J’s attempt here as an ‘attempted abuse of the bankruptcy system’. This was according to Leigh O’Dell, one of the lead attorneys for the plaintiffs in the lawsuit. J&J discontinued its talcum powder product worldwide this year over what it calls misinformation.

Seasonals are certainly strong for Johnson and Johnson and could offer an upside regardless of the ongoing court decision. With a portfolio of healthcare products, the healthcare sector is historically resilient during any potential recession.

Over the last 15 years between March 24 and May 15 Johnson and Johnson shares have risen by an average of over 25%. The winning percentage is also 80% and the maximum drawdown is nearly 4%. So, is Johnson and Johnson worth buying into this year?

Major trade risks: The major trade risk here is that further lawsuits weigh on J&J’s share prices.

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Author

Giles Coghlan LLB, Lth, MA

Financial Source

Giles is the chief market analyst for Financial Source. His goal is to help you find simple, high-conviction fundamental trade opportunities. He has regular media presentations being featured in National and International Press.

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