Kenvue’s SWOT analysis: stock faces Tylenol headwinds amid strategic shift

Kenvue Inc. (NYSE: KVUE), the world’s largest pure-play consumer health company with a market capitalization of $31.1 billion, is navigating a challenging landscape as it grapples with recent controversies surrounding its flagship brand Tylenol and implements strategic initiatives to drive growth. Trading near its 52-week low of $15.47, InvestingPro analysis suggests the stock is currently undervalued. This comprehensive analysis examines Kenvue’s current position, recent developments, and future prospects in light of ongoing market challenges and opportunities.

Company Overview and Recent Developments

Kenvue, which separated from Johnson & Johnson in 2023, boasts a portfolio of well-known brands including Tylenol, Neutrogena, Listerine, Zyrtec, and Band-Aid. The company operates through three segments: Self Care, Skin Health & Beauty, and Essential Health, generating over $15 billion in annual revenue.

Recent developments have put Kenvue in the spotlight, particularly concerning its Tylenol brand. In September 2025, reports emerged suggesting a potential link between prenatal use of acetaminophen, Tylenol’s active ingredient, and autism risk. This controversy led to significant stock volatility, with Kenvue shares dropping as much as 16% before stabilizing. The Department of Health & Human Services has labeled the connection as speculative, and the FDA has not found conclusive evidence supporting causality.

Financial Performance and Market Position

Kenvue’s financial performance has been mixed in recent quarters. In Q2 2025, the company reported a 4.2% decline in organic sales year-over-year, with all three segments experiencing declines: Self Care (-5.9%), Skin Health & Beauty (-3.7%), and Essential Health (-2.4%). This led to a downward revision of the company’s 2025 outlook, now expecting low-single-digit declines in organic sales instead of the previously projected 2-4% growth.

Despite these challenges, Kenvue maintains a strong market position with an impressive gross profit margin of 58.15% and increased household penetration for key brands like Zyrtec. The company offers a significant dividend yield of 5.12%, making it attractive for income-focused investors. According to InvestingPro, which provides 8 additional key insights about KVUE, the company’s PEG ratio of 0.76 suggests growth at a reasonable price.

Strategic Initiatives and Management Changes

In response to recent challenges, Kenvue’s board is reviewing strategic alternatives to enhance shareholder value. The company has also undergone leadership changes, with Kirk Perry appointed as Interim CEO. Kenvue’s strategy focuses on simplifying operations, reducing complexity, strengthening leadership, and improving execution.

Analysts have noted potential for improvement, particularly in the Skin Health & Beauty segment. Canaccord Genuity suggests that if Kenvue improves operations in this segment, achieving a 20% EBITDA margin and a 10% sales increase from depressed levels, the segment could be worth $7-13 per share, up from its current valuation of approximately $6 per share.

Market Outlook and Analyst Sentiment

Analyst sentiment on Kenvue remains mixed, with price targets ranging from $18 to $29. The company’s ability to navigate the Tylenol controversy, improve segment performance, and execute on strategic initiatives will be crucial in determining its future trajectory.

Bear Case

How might ongoing Tylenol controversy impact long-term brand equity?

The Tylenol controversy poses significant risks to Kenvue’s brand equity and market position. Tylenol is Kenvue’s second-largest brand, accounting for approximately 15% of U.S. sales and likely the company’s largest profit contributor. The ongoing debate about acetaminophen’s safety during pregnancy could lead to reduced consumer trust and potentially impact sales across Kenvue’s portfolio.

Moreover, the controversy may delay strategic opportunities and affect near-term shareholder value. The premium pricing of Tylenol compared to private labels may be challenged, potentially eroding profit margins. Analysts have noted that while the direct risk to revenue from pregnant women avoiding Tylenol is relatively small, the ancillary risks, including potential damage to brand equity and litigation risks, could be more significant.

Could declining sales across segments indicate broader market share losses?

Kenvue’s recent financial performance, with organic sales declines across all three segments, raises concerns about potential market share losses. The company’s revised downward outlook for 2025 suggests that these challenges may persist in the near term. Analysts have noted underperformance in core business segments, which has attracted activist pressure.

The decline in the Skin Health & Beauty segment is particularly concerning, as it indicates challenges beyond the Tylenol controversy. This broader weakness could signal deeper issues with Kenvue’s product portfolio or competitive positioning, potentially leading to sustained market share erosion if not addressed effectively.

Bull Case

How could strategic alternatives and new leadership unlock shareholder value?

Kenvue’s board review of strategic alternatives and the appointment of a new interim CEO present opportunities for value creation. The company’s diverse portfolio of strong brands provides a solid foundation for potential restructuring or spin-off opportunities. Analysts have suggested that improving operations, particularly in the Skin Health & Beauty segment, could significantly enhance Kenvue’s valuation.

Furthermore, the company’s new leadership team is expected to review and potentially revamp Kenvue’s operating strategy to enhance innovation and execution. This could lead to improved financial metrics by 2025, despite current challenges. The company’s focus on simplifying operations and reducing complexity may result in cost savings and improved profitability over time.

What potential does Kenvue have for margin improvement and global expansion?

Kenvue’s strong gross profit margins and potential for operational efficiencies provide a foundation for future margin improvement. Analysts have noted opportunities for SG&A efficiencies that could unlock shareholder value. The company’s strategy to streamline operations and improve brand performance could lead to enhanced profitability across segments.

Additionally, Kenvue has significant global expansion potential, particularly for brands like Tylenol, which is currently a U.S.-only brand. Successful international expansion could drive long-term growth and diversify the company’s revenue streams. Secular trends such as premiumization and an aging population are expected to support Kenvue’s growth in global markets.

SWOT Analysis

Strengths:

• Strong brand portfolio including Tylenol, Neutrogena, and Listerine
• Market leadership in consumer health sector
• Solid gross profit margins (58.24%)
• Increased household penetration for key brands like Zyrtec

Weaknesses:

• Recent organic sales declines across all segments
• Underperformance in Skin Health & Beauty segment
• Dependence on U.S. market for major revenue streams
• Ongoing controversy surrounding Tylenol brand

Opportunities:

• Potential for global expansion of key brands
• Operational efficiencies and cost savings initiatives
• Strategic alternatives under review to enhance shareholder value
• Innovation potential in high-growth consumer health categories

Threats:

• Ongoing Tylenol controversy and potential litigation risks
• Increased competition from private label alternatives
• Regulatory challenges and changing consumer preferences
• Activist investor pressure due to underperformance

Analysts Targets

• Barclays: $20 (September 23rd, 2025)
• Evercore ISI: $18 (September 23rd, 2025)
• Citi Research: $20 (September 23rd, 2025)
• Evercore ISI: $23 (September 8th, 2025)
• UBS: $23 (September 8th, 2025)
• BofA Securities: $25 (September 7th, 2025)
• Canaccord Genuity: $29 (May 21st, 2025)
• Barclays: $23 (May 20th, 2025)
• RBC Capital Markets: $24 (May 9th, 2025)

Kenvue Inc . faces a critical juncture as it navigates the Tylenol controversy, implements strategic initiatives, and seeks to improve performance across its segments. With a beta of 0.67, the stock demonstrates defensive characteristics that may appeal to risk-averse investors. While the company’s strong brand portfolio and market position provide a solid foundation, its ability to address current challenges and capitalize on growth opportunities will be crucial in determining its future success. InvestingPro’s comprehensive analysis, including detailed Fair Value estimates and financial health metrics, can help investors make informed decisions about KVUE’s long-term potential.

This analysis is based on information available up to September 23, 2025.

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.