), the world's largest health-care company, on July 19, when a blizzard of instant selling whacked its stock down 16%, to 41.85--a 52-week low. It has since rebounded to 47. Investors got jittery when J&J revealed that the Food & Drug Administration was looking into a fired employee's allegation of record-keeping irregularities--which J&J denies--in Puerto Rico. This plant makes Eprex, an anemia drug sold outside the U.S. that recently attracted scrutiny after being linked to 141 cases of pure red-cell aplasia, a life-threatening anemia. J&J officials say the anemia was most likely caused by the way the drug was injected--under the skin rather than into a vein, as J&J recommends. J&J points out that the anemia has cropped up in only 1.14 patients out of 10,000.
Pros who know J&J well jumped at the stock's drop. "Historically, any chance to buy J&J at such a low multiple--16 times estimated 2003 earnings of $2.62 a share--has been a golden opportunity," says Lew Rabinowitz of New York hedge fund R. Lewis Securities, which bought shares on July 22. He sees J&J earning $2.25 a share in 2002 and the stock rebounding to its old high of 65 in 12 months--close to consensus estimates. Robert Dunne of Dresdner Kleinwort Wasserstein, who rates J&J a buy and owns shares, doubts the FDA will uncover criminal activity. The plant, he notes, was inspected recently by the FDA and French regulators. Glenn Novarro of Credit Suisse First Boston, who does not own shares, says: "We would be aggressive buyers" at these price levels. By Gene G. Marcial