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CG Capital Markets said Perrigo (NYSE:PRGO) has no exposure to lawsuits filed against Abbott (ABT) and Reckitt Benckiser (OTCPK:RBGPF) over the safety of their respective baby formulas for premature infants.
The investment bank said that while Perrigo did market baby formula, it didn’t offer a product specifically for premature infants. It also recommended buying on any weakness in the stock as a result of the news.
Shares of Abbott and Reckitt Benckiser were both driven lower Friday after Reuters reported that a jury awarded $60M to a woman who sued Reckitt over the death of her baby, alleging that Reckitt’s premature infant formula played a role in the child developing necrotizing enterocolitis, or NEC.
Reuters also reported that both Reckitt Benckiser and Abbott were facing hundreds of lawsuits claiming that they didn’t adequately warn consumers that the formulas could raise the risk of developing NEC.
“With the lawsuit focused on NEC in premature babies and the lack of warning labels, we believe it is possible the FDA will require labels warning of risk. Another potential is hospitals no longer providing premature infant formula to premature babies,” wrote the analysts.
“However, if either of these scenarios are implemented, we do not expect PRGO to be impacted due to having no exposure to premature infant formula,” they added.
CG maintained its buy rating on Perrigo, with a price target of $42.
