Investors May Cash in on DePuy Recall

Investors May Cash in on DePuy Recall

Investors May Cash in on DePuy Recall

Usually when a company messes up as massively as DePuy Orthopaedics did with its late recall of the ASR XL Acetabular System and ASR Hip Resurfacing System, investors lose confidence and sell stock, and the company must slowly work to re-earn the market's trust. Not so with Johnson & Johnson. Sure, J&J's stock has lost 8% of its value over the last 15 months, down to about $59 per share, but investors nevertheless believe that its stock will soon increase again. Predictions aren't just a few percentage points above its value 15 months agosome see an increase of 30-35% in share value to $75 to $80 a share in the near future.

How can this be? After all, aside from the DePuy recall, J&J recently recalled 300 million packages of medicine, including Children's Tylenol, Motrin, Rolaids, and Benadryl. Problems with heart devices and insulin cartridges also struck the company, and in 2010 its revenue fell by 19% ($900 million). In these circumstances, we would expect other pharmaceutical companies to aggressively move in and take over as much of J&J's market share as they can get. In reality, though, Johnson & Johnson's brand name is still worth quite a bit, with consumers ranking it number one in surveys of pharmaceutical companies. As a result, investors see these disasters as flukes of J&J's policy of decentralized management of its 250 subsidiaries.Predictions aren't just a few percentage points above its value 15 months agosome see an increase of 30-35% in share value to $75 to $80 a share in the near future.

What surprises us is that markets don't appear to be taking DePuy hip replacement lawsuits into account. Late last year, Johnson & Johnson set aside nearly a billion dollars in preparation for DePuy litigation. 93,000 hip replacements recalled from recipients' bodies will lead to many lawsuits. If you have a recalled DePuy hip implant, you should consider filing one as well. The Rottenstein Law Group is here to help you with the process of obtaining compensation that incompetent corporations caused you. Complete our contact form to the right or click this link and one of our attorneys will provide you a free consultation.

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