J&J slide intensifies as legal woes weigh on shares again

Shares of Johnson & Johnson fell as much as 6.2%, the biggest drop in five months, as a trial implicating the drugmaker in the opioid crisis continues for a second day in Oklahoma.

While Teva Pharmaceutical Industries reached a settlement with the state for $85 million on Sunday and Purdue Pharma settled for $270 million in March, Johnson & Johnson has so far committed to fighting it out in court.

Those Teva and Purdue settlements "can only help future discussions regarding settlements," Citi analyst Navann Ty wrote in a note to clients. The opioid suit, along with an estimated 14,000 lawsuits including talcum powder-cancer litigation, exposes the company to "hundreds of billions of dollars" of risk, Holly Froum, a Bloomberg Intelligence legal analyst, wrote; but she expects settlements to end up in the $5 billion to $15 billion range.

Wednesday's decline was the biggest single-day plunge for the stock this year, since reports in December that the company knew for decades that asbestos was sometimes present in its baby powder. The slide has wiped out more than $20 billion from Johnson & Johnson's market value.

The latest legal concerns may be "overblown," Wells Fargo analyst Larry Biegelsen, who has an outperform rating on the stock, wrote in a note on Wednesday. "We continue to believe that the litigation will be manageable for JNJ given its size and resources."

The analyst notes that based on J&J's opening slides in the trial, it seems that the company's pain-relief products accounted for less than 1% of the Oklahoma Medicaid opioid prescriptions from 1996-2017.

Jefferies health strategist Jared Holz advised clients in a note to "wait on JNJ" before buying the dip.