Abbott shares rise following baby formula verdict

Abbott (NYSE:ABT) shares are up ~5% in premarket trading Friday after a Missouri jury found that it and Reckitt Benckiser (OTCPK:RBGPF) were not liable for their baby formula products allegedly causing a severe bowel illness.
Reckitt Benckiser (OTCPK:RBGLY) is up ~8% premarket.
Consumers have accused the two companies of knowingly hiding the risk of necrotizing enterocolitis associated with the products. They are still facing more than 1,000 lawsuits over the issue.
In a note, JP Morgan called the verdict an “unexpected win,” adding that while many investors thought Abbott’s exposure to NEC litigation would be in the $2B-$3B range, that amount could now be reduced by $500M-$1B.
And while the next state and federal cases won’t come until spring 2025, analyst Robbie Marcus said that “after today’s verdict and the overwhelming societal support of infant formula, we think it’s prudent to lower the liability exposure and raise the odds of an Abbott victory in the trials, or at least improve the company’s negotiating power in a settlement.”
The firm rates Abbott overweight with a $135 price target (~19% upside based on Oct. 31 close).

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