Piper Jaffray Maintains Neutral Rating On JNJ

Johnson & Johnson's JNJ announcement that it entered into a consent with the FDA effectively transforms the McNeil issues from a horizon of potentially 1-2 years to something closer to 4-5 years, Piper Jaffray reports.

“In addition to lost product revenues, which totaled $900 mil for 2010, the company will now face the additional costs of a larger contingent of consultants, auditors and potential fines and write-downs,” Piper Jaffray writes. “On the one hand we've been of the mind that due to the company's broad base of businesses, a certain number of recalls and warning letters are to be expected (e.g. hip implants, contact lenses, cardiovascular balloon catheters, insulin pumps, etc.).

“However we believe that investors are finding it harder and harder to ignore the stream of quality and regulatory issues impacting JNJ, and the potential implications for a company-wide weak spot in its regulatory function. We remain Neutral on JNJ.”

Johnson & Johnson closed Thursday at $59.61.