“Abbott Labs (ABT) Stock Plummets Over 4% Due to Legal Troubles – What Investors Need to Know”
Abbott Labs (NYSE:ABT) stock takes a hit as a St. Louis jury holds its premature infant baby formula responsible for a potentially fatal bowel disease. The market capitalization of Abbott is $175 billion on estimated sales of $38.4 billion for 2024. The case filed against Abbott is just one of over 1,000 claims against various formula makers, including Reckitt Benckiser (RBGLY), which saw a $60 million verdict against its Enfamil formula earlier this year.
Reckitt has been trying to distance itself from its Mead Johnson unit, which makes Enfamil. The $400 million punitive award and $95 million in compensatory damages against Abbott Labs is considered a “gut punch” by the company. Despite arguments in court denying any scientific evidence linking their products to NEC, the damage caused by birth trauma, shareholders have also sued Abbott last year over the closure of its Michigan baby formula plant.
The global market for infant formula is estimated to be worth over $53.5 billion, with a projected growth rate of 5.6% between 2024 and 2029. Companies like Abbott, Reckitt, Perrigo (PRGO), and Nestle (NSRGY) collectively control a majority of the U.S. market.
Abbott plans to appeal the verdict, similar to Reckitt’s approach to its own legal troubles. As a result, shares in all major baby formula makers are down for the year.
In conclusion, the legal issues facing Abbott Labs and other formula makers can have significant financial implications for investors. It is crucial to stay informed about ongoing legal battles and their potential impact on stock prices and market trends in the infant formula industry.