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Investing.com - Kenvue Inc (NYSE:KVUE) stock rose approximately 5% to $21.69 following UBS’s reiteration of a Neutral rating and $25.00 price target on the consumer health company. According to InvestingPro data, analyst targets range from $22 to $29, suggesting potential upside from current levels.
UBS maintained its stance on Kenvue despite preliminary second-quarter organic sales declining 4.2%, which was more than 300 basis points below Street expectations, indicating continued fundamental challenges for the company. The company maintains impressive gross profit margins of 58.24% on revenues of $15.3 billion, though it trades at a relatively high P/E ratio of 38x.
The investment firm noted that Kenvue’s CEO Thibaut Mongon is departing, with Kirk Perry stepping in as interim CEO. UBS highlighted that Perry brings extensive consumer packaged goods (CPG) experience to the role. InvestingPro analysis shows the company maintains a FAIR financial health score, with multiple additional insights available to subscribers.
UBS analyst Peter Grom suggested that while the company’s organic growth inflection is "taking longer than expected," the recent announcements indicate that "change is on the horizon" for the Johnson & Johnson spinoff.
The research note also mentioned that Kenvue’s board is advancing its strategic review process, which UBS believes "is likely to be viewed that this step is being taken with a sense of urgency."
In other recent news, Kenvue Inc. has announced a series of significant developments, including the departure of CEO Thibaut Mongon, with Kirk Perry stepping in as Interim CEO. The company released preliminary second-quarter results, reporting a 4.2% decline in organic sales, which fell short of consensus expectations. Adjusted earnings per share are projected to be between $0.28 and $0.29, aligning with analyst forecasts. Kenvue’s board has initiated a strategic review, considering various alternatives to optimize the brand portfolio and improve performance, with advisory support from Centerview Partners and McKinsey & Company. Citi and Goldman Sachs have both maintained a Neutral rating on Kenvue, with price targets of $24.50 and $22.00, respectively. Additionally, reports have emerged of Kenvue potentially divesting several smaller skin health brands, including Clean & Clear and Maui Moisture, as part of its strategic efforts. The company plans to report full second-quarter results on August 7, when it will also revise its full-year 2025 outlook. Meanwhile, an executive search is underway for a permanent CEO, with Heidrick & Struggles assisting in the process.
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