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Investing.com - Kenvue Inc (NYSE:KVUE) stock fell 9.4% Monday following a Wall Street Journal report suggesting the Department of Health and Human Services (HHS) plans to issue a report potentially linking Tylenol to autism. The sell-off has pushed the $35.7 billion consumer health company’s shares into oversold territory, according to InvestingPro technical indicators.
The stock initially dropped as much as 16% before recovering some losses after an HHS spokesperson stated, "Until we release the final report, any claims about its contents are nothing more than speculation." The company maintains impressive gross profit margins of 58%, according to InvestingPro data, suggesting strong operational efficiency despite market challenges.
UBS maintained its Neutral rating and $23.00 price target on Kenvue following the news, noting the situation resembles issues the company faced shortly after its 2023 IPO regarding acetaminophen’s potential neurobehavioral and urogenital impacts.
UBS indicated that during the previous controversy, investor concerns primarily centered on potential financial liability rather than fundamental business implications, with shares trading down to approximately $18-$19, representing a price-to-earnings ratio of roughly 16x.
The investment firm suggested this news could create a similar overhang on the stock until the report’s release, and might limit strategic actions related to Kenvue’s Self Care division in the near term.
In other recent news, Kenvue Inc . has been the focus of multiple analyst reports amid concerns about its flagship product, Tylenol. RBC Capital has maintained a "Sector Perform" rating on Kenvue, lowering its price target to $22.00 due to what it described as a "soft" quarter, influenced by slower category growth and weak seasonal performance. BofA Securities has reiterated its "Buy" rating with a $25.00 price target, despite a significant stock decline following reports of potential links between Tylenol use during pregnancy and autism spectrum disorder. Evercore ISI also maintained an "In Line" rating with a $25.00 price target, amid the volatility caused by these concerns. The Department of Health and Human Services, led by Robert F. Kennedy Jr., is expected to release a study examining the potential risks associated with prenatal acetaminophen use, the active ingredient in Tylenol. This has resulted in ongoing litigation and regulatory concerns for Kenvue. These developments have kept Kenvue’s stock in the spotlight as investors navigate the unfolding situation.
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