Johnson & Johnson: The Impossible Beckons

Summary

• A recent Economist article on America's opioid crisis, titled with Johnson & Johnson as lead miscreant, summed up the company's opioid dilemma in a single sentence.
• Johnson & Johnson's completed settlement with two Ohio counties bought it time to assess its position before facing another courtroom drama.
• The company's role as a leading malefactor in the opioid crisis is untenable.
• A potential settlement offer for $4 billion leaves ample negotiating room.

This article was planned as the third and final article in a series describing and evaluating Johnson & Johnson's (NYSE:JNJ) litigation profile. The first two were (1) "Johnson & Johnson's Definitive Tests" and (2) "Johnson & Johnson's Dead Serious Opioid Issues".

An underlying premise of these articles was that JNJ's opioid liabilities deprived it of its otherwise rightful claim as one of the market's preeminent SWAN investments.

News on Thursday's Seeking Alpha news feed suggests a possible revised narrative may be developing. This article will sidestep my previous planned third article and work to put matters in perspective based on the Seeking Alpha report as follows:

J&J offers $4B opioid litigation settlement - WSJ

Oct. 17, 2019 4:41 AM ET|About: Johnson & Johnson (JNJ) |By: Carl Surran, SA News EditorJohnson & Johnson (NYSE:JNJ) reportedly has offered to pay $4B to settle all claims accusing the company of contributing to the opioid epidemic, a deal that likely would please J&J investors since analysts had estimated opioid litigation could cost the company $5B-$10B to settle.If completed, the deal would resolve more than 2,000 lawsuits by state and local governments alleging that J&J's marketing of pain drugs including Duragesic and Nucynta fueled the opioid crisis.The report comes as three major drug distributors - McKesson, AmerisourceBergen and Cardinal Health - are said to be near an agreement to pay $18B to settle all opioid lawsuits against them.

First and foremost, a reported settlement offer is a long way from an actual deal. Nonetheless, an offer is an important first step; the fact that such a deal is bruited as being in the works is encouraging.

A recent Economist article on America's opioid crisis, titled with Johnson & Johnson as lead miscreant, summed up the company's opioid dilemma in a single sentence.

A recent

Analyst’s Disclosure:I am/we are long JNJ. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I may buy or sell shares in JNJ over the next 72 hours.