Johnson & Johnson Loses Oklahoma Opioid Case, but the Stock Rises



Let's begin with johnson and johnson an oklahoma adjudge has ordered j. and j. to pay five hundred and seventy two million for est role in the state's opioid crisis now johnson and johnson argued that its marketing and sales activities <hes> where lawful and that it was not at fault for the crisis but jason and the judge in the court obviously disagreeing j._j. Will appeal. He'll the ruling now the interesting thing here shares of j. j. up today around two percent and that may be related to the fact that oklahoma had sought assault more than seventeen billion in damages so relatively speaking could've been worse. Yeah you're right. I think that's that's really the takeaway or the market's reaction makes a lot of sense because as you do have close released. There are some certainty now in five hundred seventy two million dollars as a whole heck of a lot less than seventeen billion so i've heard so it puts things in perspective for johnson and johnson and johnson and johnson as a business pulled in around nineteen billion dollars in free cash over the last twelve months on eighty one billion dollars dollars in sales so clearly these guys are going to be just fine <hes> but mackey no listen. I've got an opinion regarding this. I wanna call bs or bs needs to be called in in to me and i appreciate not sitting. You're saying that the opioid crisis is something that you don't assign blame to just one entity with this. My problem is the more and more research is where was the f._d._a. In all of this because to me like the f._d._a. Is the the ultimate check brian. I mean that's the organization where the buck really should be stopping and if you do a little research into this and everything that's been going on with the opioid crisis uses and then oxy continents are where things started back and i think it was like nineteen. Ninety-five i mean clearly big pharma was complicit in really trying to push rush the f._d._a. To <hes> take some more lenient types of approaches to marketing and whatnot but the fact is the f._d._a. Folded the f._d._a. Okay basically buckled and said okay yeah sure do whatever and they did it basically with with no backing from science whatsoever and so you saw this period of time. I'm where a lot of these <hes> opioids these big pharma companies were able to market them in such a way that they made made it seem as if they were appropriate treatment for more conditions for longer periods of time when really that wasn't the case i mean science clearly tells us that that some of these drugs are extremely addictive and it can ruin people's lives <hes> in so i i go back to. I appreciate the fact that oklahoma is trying to hold big pharma accountable. I think big pharma should be held accountable. I also very much believe the f._d._a. Should be held accountable leader to and i don't know that they necessarily or being thrown in the spotlight in the same way <hes> i oh i think about it from the perspective as a parent i mean let's make this relatable. This is like when you're a parent in your kid is lobbying you to tack on a bear claw to the frozen the mint chocolate chip coffey kulata that you're getting the dunkin donuts right. I mean it doesn't mean you have to do it. Your the check right. You're the one that says no. Maybe that's a little bit too much. You know maybe it's unpopular decision. You have to say no but i feel like the f._d._a. Should it should have been a little bit more fun here years ago and said you know what no no. Let's wait and maybe have some science on her side before we start making some of these decisions i confess. I didn't really follow you after you said barracuda i mean there are a lot of players. This is a crisis that i mean almost half a billion people or half a million people over the last couple of decades kids have suffered <hes> deaths from the choruses and <hes> johnson johnson is saying specifically to this case is that they only represented one percent of the oh boy the opioid sold in oklahoma so it's unfair for them to get to tacked on with this <hes> with this ruling from the shareholder perspective johnson johnson which i am at jason said i mean this is for them. Analyst were actually hoping for less than one billion dollars. Which is i in in the ruling rolling mac which is one reason why the talk i think up today even though the oklahoma was looking for seventeen more than seventeen billion analysts were probably expecting less than a billion or so so i think and the markets reacting positively to that they have some closure. It is still tied up in court. This will be the first one from state. Oklahoma was the first this will obviously now start to set open other potential cases for this so there's a little precedent set here at least for now but from johnson johnson you have us companies three injured and three seven billion dollars market cap. It yields more than three percent. The s the ten year now is at one and a half so it's more than double the ten year bond yield and so investors looking at this saying hey. I still have a fairly stable dividend payer. <hes> it's a large companies. It's not going to light the world on fire from capitol appreciation perspective but now you have this kind of at least for right now a little bit behind them and then get onto running the business as jason said they generate substantial substantial cash flows that they're going to continue to invest into their business but this will now be open for more interpretations by more courts and more states and and i doubt oklahoma will be the first okay. I want to push back on the stock of it because you mentioned your shareholder. Yeah you look jay over the last five years stock up somewhere in the neighborhood of twenty two percent the market s._n._p. Up almost double that around forty two percent when i look at these incredibly diversified conglomerates it's like j._j. There's a point where i say why not just own index fund instead yeah well. I mean we had that conversation before and i think it's a fair question. <hes> i mean enj j and j is one. I don't own personally but have recommended and recommended more on the potential for the future and i i don't know that a lot of people really think about some of the bets that j._j.'s placing today <hes> in regard to the future of medicine and i'm talking about <hes> things like robotic surgery injury they have a wing of the business called ethicon and <hes> <hes> the the founder of intuitive surgical has played a big role in helping johnson johnson build out that part of the business so i think it's exciting when you look at all of the resources a company like that has at its disposal in leadership that is starting to look forward into how how technology can really change the healthcare space <hes> i. It is a bit frustrating. Perhaps the way the stock is performed in the past. That doesn't necessarily i mean it's going to be that way in the future. <hes> in eighty made a great point there in that it's not going to lie to the world on fire from capital appreciation perspective but but really investing investing good investing is about making sure you have a nice diversified portfolio and i think john jay can be a great sort of healthcare stalwart again knocking like the world on fire up. It would be very reliable. <hes> you know they're going to get past situations like this. It's gonna make them better <hes> in they'll continue to invest in in in new parts of the business going forward yeah. The only reason i think really jason great point about some of their investments and innovations but really it's it's. It's the dividend play that you're going to get substantial yield. Let's that's that's much higher than at least the ten year but when you look at bond funds basically yielding about bond funds and then you have the potential for capital appreciation so i think that is really the investment case for johnson johnson they make the innovations is probably one of the as jason said the probably the best stalwart healthcare our company out there my mind but yeah it's not. It's not going to be one of these. One that is going to complete change your portfolio. It's going to be much more stable player but fifty eighty seven consecutive years. They just raised their dividend for the fifty seventh consecutive year so i mean there are a lot of folks out there that are looking for that kind of of reliability for their portfolio and as you get older and you get into that sort of took the protect your wealth phase of your life. I mean this is great. This is a great one. Look at from that income

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