Argus initiates coverage on Kenvue Inc (KVUE) with a Hold rating.
The analyst comments "We are launching coverage of Kenvue Inc. (KVUE) with a HOLD rating. Kenvue, formerly part of Johnson & Johnson (NYSE: JNJ ), is a pure-play consumer health company. The company is organized into three segments: Self Care, Skin Health & Beauty, and Essential Health. Major brands include Tylenol, Nicorette, Zyrtec, Neutrogena, Aveeno, Listerine, and Band-Aid. We view Kenvue as a well-run company with a long history and a valuable presence in its industry. Indeed, the company appears well positioned to take advantage of megatrends such as an aging population, the growth of the middle class in emerging markets, and increasingly empowered consumers focusing on their health. But recent growth has been tepid, and the outlook for near-term growth is neither overly robust nor transparent. From a technical standpoint, the shares have been in a bearish pattern of lower highs and lower lows since May 2023. This too gives us pause. On valuation, the shares are trading at low multiples compared to a group of industry peers. The P/E ratio of 18-times our 2023 EPS estimate is below the peer group average of 24. The current yield of about 3.4% is above the peer average of 2.2%. The price/sales ratio is low at 3.0, below the peer average of 3.4. We think that valuations are reasonable given the company's track record and outlook"
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