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Investing.com - RBC Capital has reiterated its Sector Perform rating and $22.00 price target on Kenvue Inc (NYSE:KVUE), currently trading at $18.57 and near its 52-week low, amid ongoing litigation and potential regulatory concerns surrounding its Tylenol brand. According to InvestingPro analysis, the company appears slightly undervalued at current levels.
Multiple news sources report that Health Secretary Robert F. Kennedy Jr. plans to announce a potential link between pregnant women’s use of over-the-counter pain medications like Tylenol (acetaminophen) and autism, with the Department of Health and Human Services expected to release a report this month. For deeper insights into Kenvue’s risk factors and comprehensive analysis, InvestingPro subscribers can access the detailed Pro Research Report, one of 1,400+ available company deep-dives.
The litigation history shows federal lawsuits alleging in-utero acetaminophen exposure causes autism/ADHD were consolidated into multi-district litigation in October 2022, with most federal cases dismissed by February 2024 and all remaining federal cases dismissed by August 2024, though appeals continue and new lawsuits are being filed in U.S. state courts and Canada.
Kenvue acknowledges in its disclosures that negative publicity around ingredients like acetaminophen could discourage consumers from purchasing its products, potentially harming its business, while maintaining its products are safe when used as directed.
The company’s Self Care segment, which includes Tylenol, generated $15.5 billion in net sales for fiscal year 2024, highlighting the brand’s importance to Kenvue’s revenue, though the scientific link between acetaminophen and autism/ADHD remains unproven in court. The company maintains impressive gross profit margins of 58.15% and offers a 4.04% dividend yield, demonstrating strong operational efficiency despite current challenges.
In other recent news, Kenvue Inc . reported its second-quarter 2025 earnings, which fell short of expectations. The company announced an adjusted diluted earnings per share of $0.29, missing the forecasted $0.35, and revenue of $3.84 billion, which was below the anticipated $4.18 billion. This financial performance was labeled as a "soft" quarter by RBC Capital, which subsequently lowered its price target for Kenvue to $22, citing factors such as slower category growth and weak seasonal performance. Jefferies also adjusted its price target to $25, pointing to a challenging outlook for 2025 with softer top-line performance and margin compression. Similarly, Canaccord Genuity reduced its price target to $26 following a reported 4.0% decline in sales for the second quarter, with organic sales down 4.2%. Additionally, a Wall Street Journal report indicated that U.S. Health Secretary Robert F. Kennedy Jr. plans to announce a potential link between Tylenol use during pregnancy and autism, which could impact Kenvue’s market perception.
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