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Why Johnson & Johnson Stock Fell 12% in December

By Demitri Kalogeropoulos - Updated Apr 15, 2019 at 9:57PM

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Bad press sent the healthcare titan's shares lower last month.

What happened

Johnson & Johnson (JNJ 1.13%) shares trailed the market last month as the stock lost 12% compared to a 9% slump in the S&P 500, according to data provided by S&P Global Market Intelligence.

The decline produced a modest underperformance for the healthcare giant over the year, with the stock shedding a bit more than the broader market's 6%.

Two scientists performing clinical research.

Image source: Getty Images.

So what

December's decline was driven by bad press. Specifically, a Reuters news article claimed that Johnson & Johnson's management team may have known about safety issues with its talc powder for much longer than previously revealed. Shares fell by more than 10% on the day this report hit newswires.

Now what 

The company defended itself about the allegations, saying in mid-December that the Reuters article was "false and inflammatory" and ignored the many safety tests that J&J has conducted over the years to show that its talc is free from asbestos and completely safe. Nevertheless, the company could be liable for any penalties that arise from this reporting, or at least a period of elevated legal defense expenses. In the meantime, investors are looking forward to hearing updates on its operating trends, including organic sales growth and profitability, when J&J reports fourth-quarter results on Jan. 22.

Check out the latest Johnson & Johnson earnings call transcript.

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