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CG Capital Markets said Perrigo (NYSE:PRGO) is not exposed to lawsuits filed against Abbott (ABT) and Reckitt Benckiser (OTCPK:RBGPF) over the safety of their respective premature infant formulas.
The investment bank said that while Perrigo was making a market for the child formula, did not offer a specific product for premature infants. He also recommended buying if the stock were weak following the news.
Shares of Abbott and Reckitt Benckiser fell on Friday after Reuters reported that a jury awarded $60 million to a woman who had sued Reckitt over the death of her baby, alleging that Reckitt’s infant formula had a role in the development of necrotizing enterocolitis in children, or NEC.
Reuters also reported that both Reckitt Benckiser and Abbott were facing hundreds of lawsuits alleging they failed to adequately warn consumers that the formulas could increase the risk of developing NEC.
“With the lawsuit focusing on NEC in premature infants and the lack of warning labels, we believe it is possible that the FDA will require labels that warn of risk. Another possibility is that hospitals no longer provide formula to premature babies,” the analysts wrote.
“However, if either of these scenarios is implemented, we do not anticipate that PRGO will be affected due to lack of exposure to preterm infant formula,” they added.
CG maintained a buy rating on Perrigo, with a $42 price target.