Kenvue’s SWOT analysis: stock faces challenges amid strategic shifts

Kenvue Inc., the consumer health company spun off from Johnson & Johnson in 2023, finds itself at a critical juncture as it navigates a complex landscape of market challenges and strategic opportunities. As a major player in the consumer packaged goods and beverages sector, Kenvue’s performance has drawn significant attention from investors and analysts alike, who are closely monitoring the company’s ability to deliver on its promises and overcome hurdles in key segments.

Company Overview and Market Position

Kenvue operates in three primary segments: Self Care, Skin Health & Beauty, and Essential Health. The company boasts a portfolio of well-known brands, including Neutrogena, Aveeno, and Tylenol, which have long been household names in the consumer health space. With a market capitalization hovering around $41 billion, Kenvue has established itself as a significant player in the industry.

Since its spin-off, Kenvue has faced a mix of challenges and opportunities. The company’s Self Care and Essential Health segments have demonstrated resilience, while the Skin Health & Beauty segment has struggled to meet expectations. This uneven performance across segments has led to varying outlooks from analysts and investors.

Financial Performance and Analyst Projections

Analysts project earnings per share (EPS) of $1.14 for the first fiscal year and $1.21-$1.22 for the second fiscal year. According to KVUE%7D%7D">InvestingPro data, the company maintains impressive gross profit margins of 58.15% and is expected to remain profitable this year. However, 11 analysts have recently revised their earnings expectations downward, suggesting some caution about near-term performance. These projections suggest modest growth, reflecting both the company’s established market presence and the challenges it faces in certain segments.

The company’s stock performance has been a topic of debate among analysts. While some see potential for growth, others express caution. The consensus price target among analysts ranges from $21 to $29, indicating a diverse set of expectations for Kenvue’s future performance.

Strategic Initiatives and Portfolio Review

Kenvue has introduced its "Extraordinary Powers" strategy, aimed at driving operational success and addressing challenges across its business segments. This initiative is particularly focused on revitalizing the underperforming Skin Health & Beauty segment, which has been a drag on the company’s overall performance.

Analysts have suggested that Kenvue should consider a comprehensive review of its portfolio. This recommendation comes in light of potential activist pressure and the need to optimize the company’s "tail brand strategy." Such a review could lead to strategic divestitures or increased investment in high-potential niche brands, potentially unlocking value for shareholders.

Industry Trends and Competitive Landscape

The consumer health sector faces several headwinds, including the impact of tariffs and shifting consumer preferences. These factors have contributed to slower category growth in some areas, putting pressure on Kenvue to innovate and adapt its product offerings.

Kenvue’s competitive position remains strong in the Self Care and Essential Health segments. However, the company faces stiff competition in the Skin Health & Beauty category, where it has struggled to maintain market share against both established players and emerging brands.

Segment Analysis

Self Care

The Self Care segment has been a bright spot for Kenvue, demonstrating resilience in the face of market challenges. This segment’s strong performance has helped to offset weaknesses in other areas of the business.

Skin Health & Beauty

The Skin Health & Beauty segment has been the primary source of concern for Kenvue. Underinvestment in key brands and competitive pressures have led to underperformance. However, recent data suggests early signs of recovery in brands like Neutrogena and Aveeno, offering a glimmer of hope for this crucial segment.

Essential Health

The Essential Health segment has maintained a solid performance, contributing to the company’s overall stability. This segment’s consistent results have provided a foundation for Kenvue as it works to address challenges in other areas.

Future Outlook and Challenges

Looking ahead, Kenvue faces a mix of opportunities and challenges. The company’s ability to execute its "Extraordinary Powers" strategy and successfully revitalize its Skin Health & Beauty segment will be critical in determining its future trajectory.

Analysts express some skepticism about Kenvue’s performance in the second half of 2025, citing concerns about the company’s ability to meet its guidance. The impact of tariffs and slower category growth are expected to put pressure on organic sales and EPS, potentially pushing these metrics towards the lower end of forecasted ranges.

Bear Case

How might ongoing product liability lawsuits impact Kenvue’s financial stability?

Kenvue inherited several significant product liability lawsuits from its former parent company, Johnson & Johnson. These legal challenges pose a potential threat to the company’s financial stability and reputation. The outcomes of these lawsuits could result in substantial settlements or judgments against Kenvue, potentially impacting its cash reserves and future earnings. Moreover, the ongoing litigation may divert management attention and resources from core business operations, potentially hindering the company’s ability to execute its growth strategies effectively.

What challenges does Kenvue face in improving its underperforming Skin Health & Beauty segment?

The Skin Health & Beauty segment has been a persistent weak spot for Kenvue, facing challenges such as underinvestment in key brands and intense competition. Revitalizing this segment requires significant resources and strategic focus, which may strain the company’s overall operations. The segment’s underperformance has been attributed to historical underinvestment and subsequent challenges in separating the intertwined business from its former parent company. Kenvue must navigate a highly competitive landscape while simultaneously addressing internal operational issues, making the turnaround of this segment a complex and potentially lengthy process.

Bull Case

How could Kenvue’s "Extraordinary Powers" strategy drive growth and operational efficiency?

Kenvue’s "Extraordinary Powers" strategy represents a comprehensive approach to addressing operational challenges and driving growth across its business segments. This initiative could potentially lead to improved efficiency, cost savings, and enhanced innovation capabilities. By focusing on operational success goals (OSG) for fiscal year 2025, the strategy aims to streamline processes and optimize resource allocation. If successfully implemented, this could result in improved margins, particularly in the struggling Skin Health & Beauty segment, and drive overall company performance.

What potential does Kenvue have for unlocking value through portfolio optimization?

A comprehensive portfolio review, as suggested by some analysts, could unlock significant value for Kenvue. By strategically divesting underperforming assets and reinvesting in high-potential niche brands, the company could streamline its operations and focus on areas with the greatest growth potential. This optimization could lead to improved capital allocation, enhanced operational efficiency, and potentially higher returns for shareholders. Additionally, a well-executed portfolio strategy could position Kenvue to better capitalize on emerging consumer trends and market opportunities, driving long-term growth and profitability.

SWOT Analysis

Strengths:

• Strong brand portfolio with well-established consumer recognition
• Resilient performance in Self Care and Essential Health segments
• Solid market capitalization providing financial stability

Weaknesses:

• Underperforming Skin Health & Beauty segment
• Historical underinvestment in key brands
• Ongoing product liability lawsuits inherited from Johnson & Johnson

Opportunities:

• Potential for recovery and growth in Skin Health & Beauty segment
• Implementation of "Extraordinary Powers" strategy to drive operational efficiency
• Portfolio optimization to focus on high-growth areas and niche brands

Threats:

• Impact of tariffs on organic sales and EPS
• Market skepticism regarding second-half 2025 performance
• Intense competition in the consumer health sector
• Potential activist pressure for strategic changes

Analysts Targets

• Barclays: $22.00 (August 7th, 2025)
• Canaccord Genuity: $29.00 (May 21st, 2025)
• RBC Capital Markets: $24.00 (May 9th, 2025)
• Piper Sandler: $27.00 (May 5th, 2025)

This analysis is based on information available up to August 13, 2025, and reflects the most recent data and analyst projections for Kenvue Inc .

InvestingPro: Smarter Decisions, Better Returns

Gain an edge in your investment decisions with InvestingPro’s in-depth analysis and exclusive insights on KVUE. Our Pro platform offers fair value estimates, performance predictions, and risk assessments, along with additional tips and expert analysis. Explore KVUE’s full potential at InvestingPro.

Should you invest in KVUE right now? Consider this first:

Investing.com’s ProPicks, an AI-driven service trusted by over 130,000 paying members globally, provides easy-to-follow model portfolios designed for wealth accumulation. Curious if KVUE is one of these AI-selected gems? Check out our ProPicks platform to find out and take your investment strategy to the next level.

To evaluate KVUE further, use InvestingPro’s Fair Value tool for a comprehensive valuation based on various factors. You can also see if KVUE appears on our undervalued or overvalued stock lists.

These tools provide a clearer picture of investment opportunities, enabling more informed decisions about where to allocate your funds.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.