Wall Street analysts say Johnson & Johnson’s decision to spin off its consumer division is overall a smart business move but it could come with some risks.
"What the market is saying is that companies should focus on their core competencies and let us diversify," said Louise Chen, managing director at Cantor Fitzgerald."We've already seen several examples of large pharma separating out noncore assets."
So far, investors' reaction to the spinoff has been mild, with the stock moving only modestly higher on the news in November. "There are some risks to this execution from separating out the consumer business," Chen said."I think investors aren't fully convinced yet of the standalone earnings potential of both companies."numerous legal challenges
over the past several years, many of which are ongoing and could result in as-yet-unknown fines and settlements. Watch the video above to learn why Johnson & Johnson is splitting up and what risks may be heading its way.
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