Johnson & Johnson (JNJ) reaffirmed guidance Monday and said its board has authorized the repurchase of up to $5 billion of the drug maker's common stock in the wake of a sharp sell-off in shares following reports it covered up knowledge of carcinogenic asbestos in its iconic baby powder.

The company reaffirmed full-year sales guidance of $81 billion to $81.4 billion and earnings guidance of $8.13 to $8.18 a share and said it would use the sell-off as an opportunity.

"Based on our continued strong performance and, more importantly, the confidence we have in our business going forward, the Board of Directors and management team believe that the company's shares are an attractive investment opportunity,"said Alex Gorsky, Chairman and Chief Executive Officer in a statement.

Shares were rising about 1% after hours following the announcement.

Earlier Monday, Johnson & Johnson lost another 2.75% following up on Friday's slide, which lopped $40 billion in market value from the consumer-brands group. 

Reuters reported Friday that Johnson & Johnson knew both its raw talc and finished powder had tested positive for traces of asbestos, a carcinogen, on several occasions. The report cited documents linked to a court case earlier this year that saw a jury in Missouri award $4.7 billion to 22 women who said that the products contained asbestos and caused them to develop ovarian cancer. 

Johnson & Johnson said the story was "one-sided, false and inflammatory" and labeled it "an absurd conspiracy theory."

"Johnson & Johnson's baby powder is safe and asbestos-free," the company said. "Studies of more than 100,000 men and women show that talc does not cause cancer or asbestos-related disease," the statement added. "Thousands of independent tests by regulators and the world's leading labs prove our baby powder has never contained asbestos."

The company faces nearly 12,000 legal cases over body powders. Johnson & Johnson is in the midst of five appeals of similar verdicts linked to its products.

To understand more about Johnson & Johnson's talc troubles and trading strategies investors can use to navigate the crisis, check out Real Money's Stock of the Day coverage.

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