Johnson & Johnson lost $ 39.8 billion in market value Friday, suffering its worst trading day in more than 15 years, after Reuters said the company knew for decades that its baby powder contained asbestos — an allegation the company denied.
The pummeling was the company’s worst trading day in more than 15 years — when its shares closed down 15.85 percent on July 19, 2002. Friday was the company’s fifth-worst trading day on record.
Analysts viewed the sell-off as overdone. Wells Fargo called Friday’s moves “excessive.” J.P. Morgan called them an “over-reaction.”
Wells Fargo’s Larry Biegelsen said in a note to clients that even if J&J settled all 11,700 cases for $ 280,000 each, the highest per-case settlement amount among the cases it has followed, the total liability would be $ 3.3 billion. J.P. Morgan’s Chris Schott echoed Biegelsen, saying J&J’s exposure to the legal risk probably won’t come close to the amount J&J lost in market value Friday.