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Investing.com - Jefferies lowered its price target on Kenvue Inc (NYSE:KVUE) to $23.00 from $25.00 on Monday, while maintaining a Buy rating on the consumer health company’s stock. According to InvestingPro data, the stock has fallen over 32% in the past six months, while maintaining impressive gross profit margins of 58.15% and offering a substantial 5.43% dividend yield.
The price target reduction comes as retail trends show signs of slowing, with the firm noting a 1.5% decline representing a 100 basis point quarter-over-quarter deterioration. Litigation concerns have also taken "center stage" in the investment case for Kenvue. Despite these challenges, InvestingPro’s Fair Value analysis suggests the stock is currently undervalued, with additional insights available in the comprehensive Pro Research Report.
Despite these challenges, Jefferies believes Kenvue’s 2025 guidance will remain intact. The company had previously projected low-single-digit percentage declines in top-line revenue and earnings per share down 8.5-12.5%. The firm cites foreign exchange tailwinds of approximately 2 percentage points for sales impact in the second half and the lapping of China headwinds in the fourth quarter.
Jefferies indicated that updates on a permanent CEO appointment and the company’s strategic review process may be more significant to investors at this point, with details expected soon. The firm noted it expects these announcements in the near term.
The new $23 price target is based on a 19x multiple applied to Jefferies’ 2027 earnings per share estimate of $1.23. The firm lowered its target multiple to account for "lower visibility into turnaround timing, given legal liability risk."
In other recent news, Kenvue Inc . has been named as a codefendant in a UK class action lawsuit alleging that Johnson & Johnson’s talcum products cause cancer. The lawsuit involves fewer than 2,000 plaintiffs, contrary to media reports suggesting over 3,000 claimants, seeking more than £1 billion in damages. Despite the legal challenges, Canaccord Genuity has reiterated its Buy rating for Kenvue, maintaining a price target of $26.00. Meanwhile, UBS has maintained a neutral rating on the stock. Moody’s Ratings has affirmed Kenvue’s A1 long-term issuer rating but changed the outlook to negative due to operational challenges impacting the company’s performance. These challenges have led Kenvue to lower its full-year guidance and launch a strategic review to optimize its brand portfolio. Additionally, President Donald Trump recently issued a warning against the use of Tylenol, marketed by Kenvue, during pregnancy and childhood. However, the European Medicines Agency stated there is no evidence linking paracetamol use during pregnancy to autism, countering Trump’s claims.
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