Johnson & Johnson Falls 9% Since Recall News (JNJ)

Johnson & Johnson (NYSE:JNJ) at the start of May recalled 43 over-the-counter medicines made for infants and children -- including liquid versions of Tylenol, Motrin, Zyrtec and Benadryl.  JNJ shares are down more than 9% and thanks to the recall this dip may be a buying opportunity.

Johnson & Johnson (JNJ) shares are trading at $58.62 today, that's just five dollars away from its 52-week low of $53.86.  JNJ shares have made a steady incline during the past 12 months and then after the recall news have dropped like a rock.

The pain continues for JNJ as ABC reported today the U.S. government may take criminal action against the company over sloppy quality control that led to last month's massive recall of over-the-counter infant's and children's liquid medicines.

BUY ON WEAKNESS?
The Nation agrees with theMoneyTimes.com on a possible buy on JNJ:
(THEMONEYTIMES.com) Johnson & Johnson is a well-run company with a culture that's been building for over a century. It seems likely that the company will be able to fix its problems and bounce back just fine -- remember the tampered Tylenol problem in the 1980s? The solution may not happen quickly, but Johnson & Johnson has and always will be a long-term investment.

Still, that doesn't give you a license to go all in on Johnson & Johnson, either. The company's risk is hard to quantify. If you're going to buy, a measured approach of buying in stages may be the best move.

The cost of the recall could be pricey and its not clear how much this will hurt future earnings for the company.  JNJ shares thanks to this recent decline now have a P/E of 12.3, its 52-week range goes from $53 to $66.  Do use caution if thinking about picking up some JNJ on the dip, however at this rate, its shares appear to have value.

Last month JNJ lowered its full-year earnings guidance to $4.80 to $4.90 a share to reflect recent changes in foreign currency exchange rates, compared with its previous guidance of $4.85 to $4.95 a share.

(theStreet.com) Jan Wald of Noble Financial Capital Markets said that J&J's bottom line and valuation are being affected by the new health care law and the effect it's having on Medicare rebates. "But investors do take these things in stride," Wald says.  "J&J is as big as the earth," Wald says, and is "prepared for the new health care environment."

Currently, the company is saving significant money in cost-cutting and restructuring plans -- about $800 to $900 million this year and $1.4 to $1.7 billion next year, according to Wald. As a result, Wald sees a far more efficient company moving forward. 

Should JNJ shares go to $55, its an all out buy, until then investors can wait and see if the Street continues to punish JNJ shares.  The question is how low with its stock go?