Digital And Operational Shifts Will Unlock Global Opportunity

Kenvue’s consensus price target was revised downward from $22.60 to $22.13 due to heightened headline risk and legal uncertainties related to acetaminophen litigation, partially offset by views that long-term impact may be limited and current valuation discounts present a potential buying opportunity.

Analyst Commentary

• Increased headline and reputational risks following reports and regulatory scrutiny over a potential link between Tylenol (acetaminophen) use and neurological conditions have led to downward revisions in price targets.
• Bearish analysts cite ongoing legal uncertainties and potential changes in consumer behavior as factors contributing to lower sum-of-the-parts valuations and delayed strategic moves.
• Bullish analysts highlight the lack of a definitive scientific or legal causal link between acetaminophen and autism, suggesting that long-term impacts may remain limited despite negative headlines.
• Current share price weakness is seen by some as potentially overdone, with Kenvue trading at a heightened discount to Household and Personal Care (HPC) peers, creating an attractive entry point for value-focused investors.
• Reset expectations and lowered 2025 guidance under new company leadership are viewed as achievable, supporting optimism for recovery and stability if headline risks subside.

What's in the News

• President Trump publicly warned against Tylenol use in pregnant women, associating it with autism despite his scientific advisers and official notices stating no proven causal relationship; Tylenol is manufactured by Kenvue (WSJ).
• The Trump administration plans to issue warnings linking acetaminophen (the active ingredient in Tylenol) to autism in pregnancy, contradicting Kenvue’s longtime position that no causal link exists (Bloomberg).
• Kenvue's interim CEO met with HHS Secretary RFK Jr. to argue against including Tylenol as a potential autism cause in an upcoming government report, citing lack of clear evidence and supporting FDA’s current stance (WSJ).
• The Department of Health and Human Services labeled the perceived link between Tylenol and autism as "speculation," though an upcoming HHS report led by RFK Jr. is expected to suggest possible associations; news drove Kenvue’s shares down 9% (WSJ, Bloomberg).
• Evercore ISI lowered Kenvue’s price target to $23 from $25, citing sector valuations and Tylenol’s premium but noted the share selloff may be overdone given the lack of definitive evidence and potential for limited long-term impact; legal uncertainties remain (Evercore ISI).

Valuation Changes

Summary of Valuation Changes for Kenvue

• The Consensus Analyst Price Target has fallen slightly from $22.60 to $22.13.
• The Future P/E for Kenvue remained effectively unchanged, moving only marginally from 25.80x to 25.31x.
• The Discount Rate for Kenvue remained effectively unchanged, moving only marginally from 8.23% to 8.30%.