Canaccord Genuity analyst initiates coverage on Kenvue Inc (KVUE) with a Buy rating and a price target of $28.00.
The analyst comments "We are initiating coverage of Kenvue with a BUY rating and $28 PT. KVUE is a global consumer health and wellness company known for Tylenol, Neutrogena, Johnson's, and Band-Aid, along with a few dozen other consumer-health-focused brands. Kenvue recently spun out of Johnson & Johnson's (NYSE: JNJ ) consumer health portfolio in May 2023. After the spin, JNJ still owned ~90% of KVUE shares. However, the lead managers waived their lockup period and JNJ shareholders tendered shares to be exchanged for KVUE shares. This exchange reduced JNJ's ownership of KVUE shares to a touch below 10%. With the ownership overhang resolved, we believe Kenvue is now well-positioned to focus on growing its core brands through its strong innovation and marketing engine. We also expect Kenvue to benefit from its global scale, which is a core advantage vs. competitors in our view due to benefits from pricing power and bargaining power with suppliers/retailers. We also believe Kenvue's brands are global household names that generally hold up well during recessionary periods as consumers look to buy brands they trust. With KVUE trading at ~17x FY2 projected EPS compared to CPG peers at ~19x and best-in-class peers in the low to high 20s, combined with both sales and margin growth opportunity, we believe there is a great risk/reward opportunity here."
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