J&J Stock Flat on Downgrade, Rolaids Recall

Johnson & Johnson's McNeil Consumer Healthcare division is recalling more lots of Rolaids due to complaints of foreign particulates.
By Andrea Tse ,

NEW YORK (

TheStreet

) --

Johnson & Johnson's

(JNJ) - Get Report

McNeil Consumer Healthcare division is recalling more lots of Rolaids due to complaints of foreign particulates in the over-the-counter anti-acid drug.

All lots of Rolaids Extra Strength Softchews, Rolaids Extra Strength plus Gas Softchews and Rolaids Multi-Symptom plus Anti-Gas Softchews distributed in the U.S. are being recalled.

McNeil said it's issuing the recall after customers complained about finding foreign materials such as metal and wood particles in the products. The J&J unit believes the Rolaids were contaminated during manufacturing at a third-party manufacturer.

"While the risk of serious adverse health consequences is remote, McNeil Consumer Healthcare advises consumers who have purchased these recalled products to discontinue use," said McNeil in a press release.

The unit says it will put hold production of these products until the problems have been resolved.

McNeil has already issued several major over-the-counter drug recalls this year, involving tens of millions of units at the wholesale and retail levels -- many of them attributable to "smelly" children's Tylenol."

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On Thursday, Wells Fargo downgraded J&J to market perform from outperform due over-the-counter drug manufacturing issues. After speaking with consultants knowledgeable about the company's manufacturing issues, analyst Larry Biegelsen is 25% to 50% sure that the company may have to shut down its Las Piedras, Puerto Rico facility due to manufacturing deficiencies. Biegelsen and his colleagues say that Las Piedras produces most of the over-the-counter drugs for J&J's McNeil business in the U.S.

"With this risk on the horizon and few positive catalysts likely in the next six months, we expect JNJ shares to be range bound and prefer to move to the sideline until there is some clarity on the situation," Biegelsen noted to clients.

J&J shares are flat at $62.05 in afterhours trading.

-- Written by Andrea Tse in New York.

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