Opinion ID: 350232
Heading Depth: 2
Heading Rank: 2

Heading: B & L Stock Prices Plummet in Response to Adverse Publicity

Text: 6 Both analysts and B & L itself anticipated a decrease in sales of a 72-Soflens kit for practitioners after the final introductory symposium. Subsequent sales would consist primarily of replacement lenses. But, during the early months of 1972, Soflens faced less predictable, and more serious, difficulties. A primary source of concern among investors and within B & L itself was a spate of adverse publicity (flak) generated by broad coverage accorded medical studies indicating that soft contact lenses were not as safe and effective as conventional vision aids. The financial press reported that medical researchers had discovered substantial bacterial contamination of the Griffin lens, a soft contact lens manufactured by Frigitonics Inc. for the Canadian market, and that the American Optometric Association was questioning the sterility of Soflens itself. Rumors abounded that the FDA was contemplating withdrawal of its approval of Soflens, further prompting many analysts to predict weakened consumer acceptance of the product. 7 The possibility of competition for Soflens proved even more damaging to B & L's stature among investors. On February 23rd and 24th, 1972 the price of B & L shares dropped a total of 191/8 points, 113/8 of these on the 23rd alone, after the Wall Street Journal announced that E. I. du Pont de Nemours & Co. would enter the soft contact lens business. By the end of the month, B & L's prospects had again darkened. On February 29th, Smith Barney & Co. analyst J. Gary Burkhead withdrew his buy recommendation on B & L. The next day, March 1st, B & L issued a press release stating that Soflens shipments had been halted by contamination in the shipping vials, and on that day alone B & L stock prices fell 171/2 points. During the three weeks preceding the week of March 13th, B & L plummeted a precipitous 40 points on the New York Stock Exchange. And, as that week began, reports that the Senate planned to investigate B & L's monopolistic hold on the soft contact lens market circulated in the financial community.