INDIANAPOLIS (AP) – A Wells Fargo analyst downgraded shares of Johnson & Johnson on the possibility of a shutdown at its Puerto Rico factory due to manufacturing problems.
THE OPINION: The reputation of the New Brunswick, N.J., company has been battered in the past year by product recalls of millions of bottles of Tylenol, Motrin and other nonprescription drugs.
Analyst Larry Biegelsen said Thursday in a research note his firm sees a 25 percent-to-50 percent chance of a shutdown for the Las Piedras factory, which makes most of the over-the-counter drugs for the U.S. market.
“With this risk on the horizon and few other positive catalysts likely in the next six months, we expect (J&J) shares to be range bound and prefer to move to the sideline until there is some clarity on the situation,” Biegelsen wrote, and downgraded the stock to “market perform” from “outperform.
The analyst also noted that the Food and Drug Administration could issue a corporate warning, which would have no financial impact. He said his insight into the situation is “far from clear” in part because he does not know the specifics of a remediation plan the company submitted in July to the FDA.
Date: December 9, 2010
Source: Associated Press
