Formerly known as Johnson & Johnson's consumer segment, Skillman-based Kenvue Inc. (KVUE) made its NYSE debut in August 2023. With a market cap of $39.3 billion, it is a global consumer health company with Self-Care, Skin Health and Beauty, and Essential Health segments.
Shares of Kenvue have underperformed the broader market considerably over the past year. KVUE has tumbled 21.8% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 26.2%. In 2024, KVUE stock is down 4.6%, while the SPX is up 9.5% on a YTD basis.
Narrowing the focus, KVUE’s underperformance looks more pronounced in comparison to the S&P 500 Consumer Staples Sector SPDR (XLP). The exchange-traded fund has gained 7.8% YTD, compared to KVUE’s single-digit loss for the period.
KVUE’s weak price action relative to the broader indexes over the past year can be attributed to its declining net income and lower organic growth, particularly in the U.S. skin health and beauty business and the China market. These challenges have impacted consumer confidence.
However, things are looking up for the stock as Kenvue’s shares surged over 5% following Q1 earnings results on May 7. Its net sales of $3.89 billion surpassed the consensus estimate by 2.7%, while adjusted EPS of $0.28 beat Wall Street’s estimates by 12%.
For the current fiscal year, ending in December, analysts expect KVUE’s EPS to decline 10.9% year over year to $1.15. However, the company’s earnings surprise history is solid. It beat the consensus estimate in each of the last four quarters.
On May 8, HSBC analyst Jeremy Fialko maintained a "Hold" rating on Kenvue and raised the price target from $20 to $21, which implies a modest 2.2% upside potential.
The consensus view on KVUE is bullish overall. Among the 14 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on five “Strong Buy” ratings, one “Moderate Buy,” seven “Holds,” and one “Strong Sell.”
This configuration is slightly less bullish than three months before, with six analysts suggesting a “Strong Buy,” and none with a “Strong Sell” rating.
The mean price target of $22.75 suggests a 10.8% upside potential from KVUE’s current levels. The Street-high target of $28 indicates that the stock could rally as much as 36.3%.
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