What happened

Shares of Mallinckrodt (NYSE:MNK) closed up 12% on Monday while Endo International (NASDAQ:ENDP) jumped almost 13%, without either company releasing any news.

It could just be a coincidence, but it seems likely that investors have more confidence that the opioid lawsuits that both companies face will be settled sooner rather than later.

So what

A decision in an opioid lawsuit between Johnson & Johnson (NYSE:JNJ) and the State of Oklahoma is expected in the coming weeks, so opioid companies have an incentive to settle their cases rather than let the Johnson & Johnson ruling set the bar for what others might have to pay.

Earlier this month, Bloomberg reported that drug distributors McKesson (NYSE:MCK), Cardinal Health (NYSE:CAH), and AmerisourceBergen (NYSE:ABC) were in talks with a group of state attorneys general to settle their lawsuits. The companies reportedly wanted to pay $10 billion and the states wanted $45 billion, which seems like a fairly large gap to find a compromise.

Pills on $100 bills

Image source: Getty Images.

Now what

While a settlement would be great news for Mallinckrodt and Endo International -- assuming it didn't send either company into bankruptcy -- without any additional information, it's hard to see why now is a good time to invest in the companies. Mallinckrodt hasn't been able to spin off its specialty generics business, and Endo International continues to struggle, with second-quarter revenue down 2% year over year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.