Abbott Laboratories shares jumped Friday after the Club holding picked up a surprise victory in a trial over the safety of its formula for premature babies. The news Abbott Labs’ specialized formula is not responsible for a young baby boy developing a severe intestinal illness known as necrotizing enterocolitis, or NEC, a jury in Missouri state court found Thursday night —wrapping up a roughly five-week trial closely watched by investors. The jury also cleared Mead Johnson, a subsidiary of Reckitt Benckiser , and St. Louis Children’s Hospital from liability in the case. Plaintiffs had argued that Abbott and Mead Johnson’s formulas — used to treat premature babies in neonatal intensive care units — raised the risk of developing NEC, and that the companies did not properly disclose that risk. For their part, Abbott and Mead Johnson strongly deny the allegations and defend the products as medically necessary treatments for babies in certain instances when breast milk cannot be used. “We are pleased with the jury’s decision,” Abbott spokesperson Scott Stoffel said in a statement to CNBC on Friday morning. “The decision reinforces what we, the medical community and regulatory bodies have said: that preterm infant nutrition products are safe, and there is no reliable scientific evidence that they cause or contribute to cause NEC. Abbott stands by the vital role its preterm infant formula and human milk fortifiers serve in the hospital in nourishing premature babies.” ABT YTD mountain Abbott Laboratories’ year-to-date stock performance. Big picture Investors were on edge ahead of Thursday night’s verdict because both companies had lost similar cases this year — Mead Johnson in March, followed by Abbott Labs in late July. The March defeat suffered by Mead, in particular, put the NEC issue firmly in the spotlight, causing a steep and prolonged sell-off in the shares of both companies. We bought additional shares of Abbott Labs on the way down on multiple occasions, believing the magnitude of the market value decline did not adequately reflect the potential damages the company would have to pay if its legal fight went poorly despite the medical community on its side. That includes a trio of major U.S. health agencies, which last month put out a statement in support of the specialized infant formulas like Abbott’s. The legal overhang on Abbott Labs has been real, even if shares have found some traction in recent months. Through Thursday’s close, the stock was up around 13% from its 2024 lows set on July 18. Abbott’s highest close of the year, at $120.96 a share, came on March 8 — before NEC concerns became prevalent. Based on Friday’s premarket gains, the stock was on track to approach those levels. Bottom line Abbott Labs still faces other cases over its specialized formulas across the country, but Thursday night’s win is significant. The stock reaction makes that clear, gaining more than 4.5%. “They won a case they were supposed to lose. … The day of the plaintiffs taking it to Abbott is over,” Jim Cramer said Friday on CNBC. “That stock is dirt cheap,” he added. Abbott shares traded around 22 times forward earnings estimates Friday, below their five-year average of 24, according to FactSet. One reason this win is such a big deal: The venue for this case was generally considered friendly to plaintiffs, Cramer has repeatedly pointed out that the case Abbott Labs lost in July was also in Missouri state court. Those worries were compounded during the October trial when the judge did not allow a recent statement from U.S. health agencies to be shown to the jury. “There is no conclusive evidence that preterm infant formula causes NEC,” the Food and Drug Administration, Centers for Disease Control and Prevention and National Institutes of Health wrote in an October statement . At the time, we heralded that statement as a win for Abbott, only to need to temper our expectations after the judge made his decision. Still, we figured Abbott Labs may lose this case, but at least as trials began in other states, the company would most likely be able to use the supportive statement from the FDA, CDC and NIH to buttress its defense. With victory in hand, Abbott Labs will now begin the next phase of its legal fight on much stronger ground. The hope is that, eventually, the conversation about Abbott Labs becomes squarely focused on its attractive fundamentals, which were on display last month in its third-quarter earnings report . When that happens, health-care investors should like what they hear. (Jim Cramer’s Charitable Trust is long ABT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. 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Abbott Laboratories shares jumped Friday after the Club holding picked up a surprise victory in a trial over the safety of its formula for premature babies.